Exhibit 10.22


 





CONFIDENTIAL


 


 


 


 


 


 


STOCK PURCHASE AGREEMENT


 


by and among


 


VINTAGE STOCK AFFILIATED HOLDINGS LLC


 


VINTAGE STOCK, INC.,


 


and


 


THE SHAREHOLDERS OF VINTAGE STOCK, INC.


 


 


 


 


 


 


November 3, 2016


 


 


 


 


 


 






    	 	 	 



     

    

 


TABLE OF CONTENTS




	ARTICLE 1 DEFINITIONS	1
	1.1   Definitions	1
	ARTICLE 2 SALE AND PURCHASE OF SHARES; CLOSING	11
	2.1   Sale and Purchase of Shares	11
	2.2   Purchase Price; Payment of Purchase Price and Closing Date Revolving Loan Amount; Closing Payment Certificate	11
	2.3   Closing	12
	ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SELLERS	12
	3.1   Organization and Good Standing; Trust Matters	13
	3.2   Authority; No Conflict	13
	3.3   Capitalization	14
	3.4   Financial Statements	15
	3.5   Books and Records	16
	3.6   Title to Properties; Leased Real Property	16
	3.7   Condition of Assets	17
	3.8   Accounts Receivable	17
	3.9   Inventory	17
	3.10   No Undisclosed Liabilities	18
	3.11   Taxes	18
	3.12   Employee Benefits	20
	3.13   Compliance; Governmental Authorizations	21
	3.14   Legal Proceedings; Orders	22
	3.15   Absence of Certain Changes and Events	23
	3.16   Contracts; No Defaults	25
	3.17   Insurance	27
	3.18   Environmental Matters	28
	3.19   Employees	29
	3.20   Labor Relations; Compliance	29
	3.21   Intellectual Property	30
	3.22   Certain Payments	31
	3.23   Suppliers	31



 


 


 


 


 






    	 	ii	 



     

    

 


	3.24   Relationships with Affiliates	32
	3.25   Brokers or Finders	32
	3.26   Indebtedness; Tangible Shareholders’ Equity	32
	3.27   Loans with Sellers, Executives, and Directors	32
	3.28   Bank Accounts	33
	3.29   Unclaimed or Abandoned Property; Escheat	33
	3.30   No Other Representations and Warranties	33
	ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE BUYER	33
	4.1   Organization and Good Standing	33
	4.2   Authority; No Conflict	33
	4.3   Investment Intent	34
	4.4   Certain Proceedings	34
	4.5   Brokers or Finders	34
	4.6   [Intentionally Omitted].	34
	4.7   Sufficiency of Funds	34
	4.8   Independent Investigation	35
	ARTICLE 5 COVENANTS OF THE COMPANY AND THE SELLERS PRIOR TO THE CLOSING	35
	5.1   Access and Investigation; Financial Statements	35
	5.2   Operation of the Business of the Company	35
	5.3   Negative Covenant; Cash Distributions	36
	5.4   Notification	36
	5.5   Payment of Indebtedness; Tangible Shareholders’ Equity	37
	5.6   Claims	37
	5.7   Reasonable Best Efforts	37
	5.8   No Solicitation of Other Bids	37
	5.9   Financing	38
	ARTICLE 6 COVENANTS OF THE BUYER	38
	6.1   Reasonable Best Efforts	38
	6.2   Financing	38
	6.3   Access	38
	ARTICLE 7 ADDITIONAL AGREEMENTS	39
	7.1   Certain Tax Covenants	39



 


 


 


 






    	 	iii	 



     

    

 


	7.2   Section 338(h)(10) Election	41
	7.3   Consents	42
	7.4   Release by the Sellers	42
	7.5   Confidentiality	43
	7.6   Non-competition; Non-solicitation	43
	7.7   Audited Financial Statements	45
	7.8   [Intentionally Omitted].	45
	7.9   Further Assurances	45
	7.10   Reasonable Best Efforts to Close by November 3, 2016	45
	ARTICLE 8 CONDITIONS PRECEDENT TO THE BUYER’S OBLIGATION TO CLOSE	45
	8.1   Accuracy of Representations	45
	8.2   Performance of Covenants	46
	8.3   Consents	46
	8.4   Additional Documents	46
	8.5   No Material Adverse Effect	47
	8.6   No Proceedings	47
	8.7   No Claim Regarding Ownership or Sale Proceeds	47
	8.8   Injunction	47
	8.9   No Indebtedness; Minimum Tangible Shareholders’ Equity	47
	8.10   Financing	47
	ARTICLE 9 CONDITIONS PRECEDENT TO THE SELLERS’ OBLIGATION TO CLOSE	48
	9.1   Accuracy of Representations	48
	9.2   Buyer’s Performance	48
	9.3   Additional Deliveries	48
	9.4   Indebtedness Payoff Obligation	48
	9.5   No Injunction	48
	9.6   Consents	49
	ARTICLE 10 TERMINATION	49
	10.1   Termination of Agreement	49
	10.2   Effect of Termination	50
	ARTICLE 11 SURVIVAL; INDEMNIFICATION	50



 


 


 


 


 






    	 	iv	 



     

    

 


	11.1   Survival	50
	11.2   Indemnification	50
	11.3   Indemnification Procedures	52
	11.4   Payments	54
	11.5   Offset	54
	11.6   Treatment of Indemnification Payments	55
	11.7   [Intentionally Omitted]	55
	11.8   Exclusive Remedies	55
	11.9   Mitigation	55
	11.10   No Circular Recovery	55
	ARTICLE 12 GENERAL PROVISIONS	56
	12.1   Expenses	56
	12.2   Public Announcements	56
	12.3   Authority and Rights of the Sellers’ Representative	56
	12.4   Notices	56
	12.5   Amendment and Modification; Waiver	58
	12.6   Entire Agreement	58
	12.7   Successors and Assigns	58
	12.8   Severability	59
	12.9   Construction of Terms	59
	12.10   Governing Law; Jurisdiction; Jury	59
	12.11   Counterparts	59
	12.12   No Third Party Beneficiaries; No Recourse to Financing Sources	60
	12.13   Specific Performance	60
	12.14   Certain Legal Matters	60
	12.15   Acknowledgment	60


 


 


 


 






    	 	v	 



     

    

 


Index of Exhibits


 


Exhibit A-1 – Form
of Employment Agreement for Rodney Spriggs


 


Exhibit A-2 – Form
of Employment Agreement for Steve Wilcox


 


Exhibit B – Form
of Subordinated Promissory Note


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 






    	 	vi	 



     

    

 


STOCK PURCHASE AGREEMENT


 


THIS STOCK PURCHASE
AGREEMENT (this “Agreement”) is made and entered into as of November 3, 2016, by and among Vintage Stock
Affiliated Holdings LLC, a Nevada limited liability company (the “Buyer”), Vintage Stock, Inc., a Missouri corporation
(the “Company”), the trustees of the trusts (the “Trusts”) that hold all of the outstanding
capital stock of the Company, and the trustees of three of the Trusts, Rodney Spriggs, Kenneth Caviness, and Steven Wilcox acting
in their respective individual capacities (each of the trustees and such three individuals, a “Seller,” and,
collectively, the “Sellers”), and Rodney Spriggs, in his capacity as the representative of the Sellers for certain
purposes of this Agreement (in such capacity, the “Sellers’ Representative”).


 


WHEREAS, the
Sellers collectively own, of record and beneficially, all of the issued and outstanding shares of capital stock of the Company
(the “Shares”); and


 


WHEREAS, the
Buyer desires to acquire the Shares from the Sellers and the Sellers desire to sell the Shares to the Buyer, in each case on the
terms and subject to the conditions contained in this Agreement.


 


NOW, THEREFORE,
in consideration of the mutual premises, covenants, and agreements herein contained, and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:


 


ARTICLE
1

DEFINITIONS


 


1.1             
Definitions. For purposes of this Agreement, the following terms have the meanings specified in this Section:


 


“Accounting
Referee” is defined in Section 7.2.


 


“Accounts
Receivable” is defined in Section 3.8.


 


“Acquisition
Proposal” is defined in Section 5.8(a).


 


“Affiliate”
means, with respect to any Person, any other Person (i) that directly, or indirectly through one or more intermediaries, controls,
is controlled by, or is under common control with, such Person, (ii) that is a general partner, director, manager, trustee, or
principal officer of, or a limited partner owning more than 10% of the voting interests of, such Person, or (iii) of which such
Person is a general partner, director, manager, trustee, or principal officer or a limited partner owning more than 10% of the
voting interests of, such Person. For purposes of this definition, “control” (including the terms “controlled
by” and “under common control with”) means the possession, directly or indirectly, of the power to direct, or
to cause the direction of, the management or policies of the Person in question through the ownership of voting securities, by
contract, or otherwise.


 


“Agreement”
is defined in the Preamble to this Agreement.


 


 


 






    	 	 	 



     

    

 


“Allocation
Schedule” is defined in Section 7.2.


 


“Audited Financials”
is defined in Section 7.7.


 


“Basket”
has the meaning set forth in Section 11.2(c)(i).


 


“Benefit Plan”
has the meaning set forth in Section 3.12(a).


 


“Business
Day” means any day other than a Saturday or a Sunday and any day other than a day that is a bank holiday in the State
of Missouri or the State of Nevada.


 


“Buyer”
is defined in the Preamble to this Agreement.


 


“Buyer Indemnified
Party” and “Buyer Indemnified Parties” are defined in Section 11.2(a).


 


“Closing”
is defined in Section 2.3.


 


“Closing Date”
means the date on which the Closing occurs.


 


“Closing Date
Balance Sheet” means the balance sheet of the Company as of immediately prior to the Closing on the Closing Date, prepared
according to GAAP and on a basis consistent with the historical accounting policies, methodologies, practices, and assumptions
applied by the Company, provided such historical policies, methodologies, practices, and assumptions are in accordance with
GAAP.


 


“Closing Date
Revolving Loan Amount” means the amount outstanding immediately prior to the Closing under the Revolving Loan.


 


“Closing Payment
Certificate” is defined in Section 2.2(c).


 


“Closing Shareholder
Payment Amount” is defined in Section 2.2(b).


 


“Closing Term
Loan Payment Amount” means the aggregate amount necessary to satisfy and extinguish the Term Loan


 


“Company”
is defined in the Preamble to this Agreement.


 


“Company Intellectual
Property” means all Intellectual Property that is owned or held for use by the Company.


 


“Company IP
Agreements” means all written licenses, sublicenses, consent to use agreements, settlements, coexistence agreements,
covenants not to sue, permissions, and other Contracts (including any right to receive or obligation to pay royalties or any other
consideration), relating to Intellectual Property to which the Company is a party, beneficiary, or otherwise bound (other than
Contracts pursuant to which Intellectual Property is licensed to the Company under “shrink wrap” or “click through”
license agreements accompanying commercially available retail computer software or web applications that have not been modified
or customized for the Company).


 


 


 






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“Company IP
Registrations” means all Company Intellectual Property owned by the Company that is subject to any issuance registration,
application, or other filing by, to, or with any Governmental Body or authorized private registrar in any jurisdiction, including
registered trademarks, domain names, and copyrights, issued and reissued patents, and pending applications for any of the foregoing.


 


“Consent”
means any approval, consent, ratification, waiver, or other authorization (including any Governmental Authorization).


 


“Contemplated
Transactions” means all of the transactions contemplated by this Agreement, including: (i) the sale of the Shares by
the Sellers to the Buyer; (ii) the execution and delivery of the Transaction Documents by the parties thereto; and (iii) the performance
by the Buyer, the Sellers, and the Company of their respective covenants and obligations under the Transaction Documents.


 


“Contracts”
means all contracts, leases, deeds, mortgages, licenses, instruments, notes, commitments, undertakings, indentures, joint ventures,
and all other agreements, commitments, and legally binding arrangements, whether written or oral.


 


“Direct Claim”
is defined in Section 11.3(c).


 


“Disclosure
Schedules” means the Disclosure Schedules delivered by the Sellers to the Buyer concurrently with the execution and delivery
of this Agreement.


 


“Dollars or
$” means the lawful currency of the United States of America.


 


“Employment
Agreements” means, collectively, the individual Employment Agreements between the Company, on the one hand, and Rodney
Spriggs and Steve Wilcox, on the other hand, in the forms attached hereto as Exhibits A-1 and A-2, respectively.


 


“Encumbrance”
means any charge, claim, community property interest, condition, equitable interest, lien, mortgage, guarantee, right of way, option,
pledge, security interest, right of first refusal, or any restriction on use, voting, transfer, receipt of income, or exercise
of any other attribute of ownership other than any such items or conditions created with respect to the Financing.


 


“Environment”
means soil, land surface, or subsurface strata, surface waters (including navigable waters, streams, ponds, drainage basins, and
wetlands), groundwater, drinking water supply, stream sediments, ambient air (including indoor air), plant and animal life, and
any other environmental medium or natural resource.


 


 


 


 






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“Environmental,
Health, and Safety Liabilities” means any cost, damage, liability, or other obligation arising under Environmental Law
or Occupational Safety and Health Law and consisting of or relating to (i) any environmental, health, or safety matters or conditions
(including on-site or off-site contamination, occupational safety and health, and regulation of chemical substances or products);
(ii) fines, penalties, judgments, awards, settlements, legal or administrative proceedings, damages, losses, claims, demands, and
response, investigative, remedial or inspection costs and expenses arising under Environmental Law or Occupational Safety and Health
Law; (iii) financial responsibility under Environmental Law or Occupational Safety and Health Law for cleanup costs or corrective
action, including any investigation, cleanup, removal, containment, or other remediation or response actions (“Cleanup”)
required by applicable Environmental Law or Occupational Safety and Health Law (whether or not such Cleanup has been required or
requested by any Governmental Body or other Person) and for any natural resource damages; or (iv) any other compliance, corrective,
investigative, or remedial measures required under Environmental Law or Occupational Safety and Health Law. The terms “removal,”
“remedial,” and “response action” include the types of activities covered by the U.S. Comprehensive
Environmental Response, Compensation, and Liability Act, 42 U.S.C. §9601 et seq., as amended.


 


“Environmental
Law” means any Environmental hazardous substance or pollutant Legal Requirement that requires or relates to: (i) advising
appropriate authorities, employees, and the public of intended or actual releases of pollutants or hazardous substances or materials,
violations of discharge limits, or other prohibitions and of the commencement of activities that could have significant impact
on the Environment; (ii) preventing or reducing to acceptable levels the release of pollutants or hazardous substances or materials
into the Environment; (iii) reducing the quantities, preventing the release, or minimizing the hazardous characteristics of pollutants
that are generated; (iv)  protecting natural resources, species, or ecological amenities; (v) reducing to acceptable levels
the risks inherent in the transportation of hazardous substances, pollutants, oil, or other potentially harmful substances with
respect to the Environment; (vi) cleaning up pollutants that have been released into the Environment, preventing the threat of
release, or paying the costs of such clean up or prevention; or (vii) making responsible parties pay private parties for damages
done to their health or the Environment, or permitting self-appointed representatives of the public interest to recover for injuries
done to public assets.


 


“ERISA”
means the Employee Retirement Income Security Act of 1974, as amended, and the regulations promulgated thereunder.


 


“ERISA Affiliate”
means all employers (whether or not incorporated) that would be treated together with the Company or any of its Affiliates as a
“single employer” within the meaning of Section 414 of the Code.


 


“Exchange
Act” means the United States Securities Exchange Act of 1934, as amended, or any successor federal statute, and the rules
and regulations thereunder, which shall be in effect at the time.


 


“Facilities”
means any real property, leaseholds, or other interests in real property currently owned, occupied, or operated by the Company
and any buildings or structures currently owned, leased, occupied, or operated by the Company.


 


“Final Order”
means an Order of a Governmental Body that is in full force and effect and with respect to which no appeal, request for stay, request
for reconsideration, or other request for review is pending; with respect to which the time for appeal, requesting a stay, requesting
reconsideration, or requesting other review has expired; and with respect to which the time for the Governmental Body to set aside
the order sua sponte has expired.


 


 


 


 






    	 	4	 



     

    

 


“Financial
Statements” is defined in Section 3.4(a).


 


“Financing”
is defined in Section 6.2.


 


“GAAP”
means United States generally accepted accounting principles in effect from time to time.


 


“Governmental
Authorization” means any approval, consent, license, permit, waiver, or other authorization issued, granted, given, or
otherwise made available by or under the authority of any Governmental Body or pursuant to any Legal Requirement.


 


“Governmental
Body” means any: (i) nation, state, county, city, town, village, district, or other jurisdiction of any nature; (ii)
federal, state, local, municipal, foreign, or other government; (iii) governmental or quasi-Governmental Body of any nature (including
any governmental agency, branch, department, official, or entity and any court or other tribunal); (iv) multi-national governmental
or quasi-governmental organization or body; or (v) body exercising, or entitled to exercise, any administrative, executive, judicial,
legislative, police, regulatory, or taxing authority or power of any nature.


 


“Hastings
Project” means the acquisition of certain assets, leasehold interests, and other property rights of the business of Hastings
Entertainment by the Company.


 


“Hazardous
Activity” means the distribution, generation, handling, importing, management, manufacturing, processing, production,
refinement, storage, transfer, transportation, treatment, or use (including any withdrawal or other use of groundwater) of Hazardous
Materials in, on, under, or about the Facilities or any part thereof or the Release about, or from the Facilities or any part thereof
into the Environment, and any other act, business, activity, or operation that increases the danger, or risk of danger, or poses
an unreasonable risk with respect to Hazardous Materials of harm to persons or property on or off the Facilities, or that may adversely
affect the value of the Facilities currently used by the Company in any material respect.


 


“Hazardous
Materials” means any waste or other substance that is listed, defined, designated, or classified as, or otherwise determined
to be, hazardous, radioactive, or toxic or a pollutant or a contaminant under any Environmental Law, including any mixture or solution
thereof.


 


“Improvements”
is defined in Section 3.6(c).


 


“Indebtedness”
means, other than trade payables of the Company incurred in the Ordinary Course of Business or indebtedness of the Company incurred
pursuant to the Financing, (i) indebtedness for borrowed money or for the deferred purchase price of property or services, including
(A) any indebtedness evidenced by a Contract, note, bond, debenture, or similar instrument, (B) accrued interest and any prepayment
premiums, penalties, breakage costs, or other similar obligations in respect thereof, and (C) any guarantees or other contingent
obligations in respect thereof; (ii) obligations to pay rent or other amounts under any lease of real property or personal property,
or a combination thereof, which obligations are required to be classified and accounted for as capital leases on a balance sheet
under GAAP; (iii) obligations in respect of outstanding letters of credit, acceptances, and similar obligations created for the
account of such person; and (iv) liabilities under interest rate cap agreements, interest rate swap agreements, foreign currency
exchange agreements, and other hedging agreements or arrangements.


 


 


 






    	 	5	 



     

    

 


“Indemnified
Party” is defined in Section 11.3.


 


“Indemnifying
Party” is defined in Section 11.3.


 


“Individuals”
is defined in Section 3.21(g).


 


“Intellectual
Property” means all intellectual property and industrial property rights and assets, and all rights, interests, and protections
that are associated with, similar to, or required for the exercise of, any of the foregoing, however arising, pursuant to the Legal
Requirements of any jurisdiction throughout the United States of America, whether registered or unregistered, including any and
all: (i) trademarks, service marks, trade names, brand names, logos, trade dress, design rights, and other similar designations
of source, sponsorship, association, or origin, together with the goodwill connected with the use of and symbolized by, and all
registrations, applications, and renewals for, any of the foregoing; (ii) internet domain names, whether or not trademarks, registered
in any top-level domain by any authorized private registrar or Governmental Body, web addresses, web pages, websites, and related
content, accounts with Twitter, Facebook, and other social media companies and the content found thereon and related thereto, and
URLs; (iii) works of authorship, expressions, designs, and design registrations, whether or not copyrightable, including copyrights,
author, performer, moral, and neighboring rights, and all registrations, applications for registration, and renewals of such copyrights;
(iv) inventions, discoveries, trade secrets, business and technical information and know-how, databases, data collections, and
other confidential and proprietary information and all rights therein; (v) patents (including all reissues, divisionals, provisionals,
continuations and continuations-in-part, re-examinations, renewals, substitutions, and extensions thereof), patent applications,
and other patent rights and any other Governmental Authorization indicia of invention ownership (including inventor’s certificates,
petty patents, and patent utility models); and (vi) software and firmware, including data files, source code, object code, application
programming interfaces, architecture, files, records, schematics, computerized databases, and other related specifications and
documentation, other than “off-the-shelf” products and “shrink wrap” software
licensed to the Company in the Ordinary Course of Business.


 


“Interim Balance
Sheet” is defined in Section 3.4(a).


 


“Interim Balance
Sheet Date” is defined in Section 3.4(a).


 


“IRC”
means the Internal Revenue Code of 1986, as amended, or any successor law, and regulations issued by the IRS pursuant thereto.


 


 


 






    	 	6	 



     

    

 


“IRS”
means the U.S. Internal Revenue Service or any successor agency, and, to the extent relevant, the U.S. Department of the Treasury.


An individual will
be deemed to have “Knowledge” of a particular fact or matter if he or she is actually aware of such fact or
matter or if a prudent individual in similar circumstances would become aware of such fact or matter in the course of conducting
a reasonably comprehensive investigation concerning the existence of such fact or matter. “Knowledge of the Company”
means the Knowledge of Rodney Spriggs, Kenneth Caviness, or Steven Wilcox.


 


“Leased Real
Property” has the meaning set forth in Section 3.6(b).


 


“Legal Requirement”
means any Order, constitution, law, ordinance, principle of common law, rule, regulation, statute, treaty, or other requirement
or rule of law of any Governmental Body.


 


“Losses”
means losses, damages, liabilities, deficiencies, judgments, interest, awards, penalties, fines, costs, or expenses of whatever
kind, including reasonable attorneys’ fees and the cost of enforcing any right to indemnification hereunder and the cost
of pursuing any insurance providers; provided, however, that “Losses” shall not include punitive, incidental,
consequential, special or indirect damages, except in the case of fraud or to the extent actually awarded to a Governmental Body
or other third party.


 


“Material
Adverse Effect” means any event, occurrence, fact, condition, or change that is, or could reasonably be expected to become,
materially adverse to (i) the business, results of operations, condition (financial or otherwise), or assets of the Company or
(ii) the ability of any Seller to consummate the Contemplated Transactions on a timely basis; provided, however,
that “Material Adverse Effect” shall not include any event, occurrence, fact, condition, or change, directly or indirectly,
arising out of or attributable to: (A) general economic or political conditions; (B) conditions generally affecting the industries
in which the Company operates, including increases in competition; (C) any changes in financial or securities markets in general;
(D) acts of war (whether or not declared), armed hostilities, or terrorism, or the escalation or worsening thereof and any
man-made disaster or acts of God; (E) any action required or permitted by this Agreement or any action taken or not taken with
the written consent of or at the written request of the Buyer; (F) any changes in applicable Legal Requirements or accounting rules,
including GAAP; (G) the public announcement, pendency, or completion of the Contemplated Transactions; (H) any failure, in and
of itself, by the Company to meet any internal or published projections, forecasts, or revenue or earnings predictions (it being
understood that the underlying facts or occurrences giving rise to such failure may be taken into account in determining whether
there has been or will be, a Material Adverse Effect, other than facts or occurrences set forth in clauses (A) through (G) immediately
above); or (I) any event that would otherwise constitute a material adverse effect under this definition that is subsequently materially
cured by the Company or Sellers; provided further, however, that any event, occurrence, fact, condition, or change referred
to in clauses (A) through (D) immediately above shall be taken into account in determining whether a Material Adverse Effect has
occurred or could reasonably be expected to occur to the extent that such event, occurrence, fact, condition, or change has a disproportionate
effect on the Company compared to other participants in the industries in which the Company conducts its businesses.


 


 


 


 


 






    	 	7	 



     

    

 


“Material
Contracts” is defined in Section 3.16.


 


“Nondisclosure
Agreement” means that certain Confidentiality and Non-Disclosure Agreement dated effective as of July 1, 2016 between
the Company and Live Ventures Incorporated.


 


“Occupational
Safety and Health Law” means any Legal Requirement designed to provide safe and healthful working conditions and to reduce
occupational safety and health hazards, and any program, whether governmental or private (including those promulgated or sponsored
by industry associations and insurance companies), designed to provide safe and healthful working conditions.


 


“Order”
means any award, decree, decision, injunction, judgment, order, ruling, subpoena, or verdict entered, issued, made, or rendered
by any court, administrative agency, or other Governmental Body or by any arbitrator.


 


“Ordinary
Course of Business” means an action taken by the Company that is consistent with the past practices of the Company and
is taken in the ordinary course of the Company’s normal day-to-day operations.


 


“Organizational
Documents” means (i) the articles or certificate of incorporation and bylaws of a corporation; (ii) the articles of organization
or certificate of formation or similar document and limited liability company agreement or operating agreement or similar document
of a limited liability company; (iii) any charter or similar document adopted or filed in connection with the creation, formation
or organization of a Person; and (iv) any amendment to any of the foregoing.


 


“Person”
means any individual, corporation (including any non-profit corporation), general or limited partnership, limited liability company,
joint venture, estate, trust, association, organization, labor union, or other entity or Governmental Body.


 


“Personally
Identifiable Information” means data that identifies a particular Person, including name, address, telephone number,
electronic mail address, social security number, bank account number, or credit card number.


 


“Post-Closing
Tax Period” means any taxable period beginning after the Closing Date and, with respect to any taxable period beginning
before and ending after the Closing Date, the portion of such taxable period beginning after the Closing Date.


 


“Preamble”
means the introductory paragraph to this Agreement.


 


“Pre-Closing
Tax Period” means any taxable period ending on or before the Closing Date and, with respect to any taxable period beginning
before and ending after the Closing Date, the portion of such taxable period ending on and including the Closing Date.


 


“Pre-Closing
Taxes” means Taxes of the Company for any Pre-Closing Tax Period.


 


“Privacy Statements”
is defined in Section 3.21(g).


 


 


 


 


 






    	 	8	 



     

    

 


“Proceeding”
means any action, arbitration, audit, hearing, investigation, litigation, or suit (whether civil, criminal, administrative, investigative,
or informal) commenced, brought, conducted, or heard by or before, or otherwise involving, any Governmental Body or arbitrator.


 


“Promissory
Note” is defined in Section 2.2(b).


 


“Purchase
Price” is defined in Section 2.2(a).


 


“Real Property
Leases” means, collectively, the leases or similar Contracts under which the Company is a lessee of, or occupies, any
real property owned by any third Person required to be set forth on Section 3.6(b) of the Disclosure Schedules.


 


“Release”
means any spilling, leaking, emitting, discharging, depositing, escaping, leaching, dumping, or other releasing into the Environment,
whether intentional or unintentional.


 


“Representative”
means with respect to a particular Person, any director, officer, member, manager, employee, agent, consultant, advisor, or other
representative of such Person, including legal counsel, accountants, and financial advisors.


 


“Required
Consents” is defined in Section 7.3.


 


“Restricted
Business” means any business that would be directly or indirectly competitive with the Company as of the Closing Date.
For avoidance of doubt, “Restricted Business” shall not include any Seller providing services to the Company pursuant
to an employment or consulting agreement.


 


“Restricted
Period” is defined in Section 7.6(a).


 


“Revolving
Loan” means the revolving loan made by Arvest Bank to the Company, loan number 4240586, pursuant to the applicable contract,
note, and/or similar instrument by or between the Company and Arvest Bank.


 


“Section 338(h)(10)
Election” is defined in Section 7.2.


 


“Securities
Act” means the Securities Act of 1933, as amended, or any successor law, and rules and regulations issued pursuant thereto.


 


“Seller”
and “Sellers” are defined in the Preamble to this Agreement.


 


“Seller Indemnified
Party” and “Seller Indemnified Parties” are defined in Section 11.2(b).


 


“Sellers’
Representative” is defined in the Preamble to this Agreement.


 


“Shares”
is defined in the recitals to this Agreement.


 


“Straddle
Period” is defined in Section 7.1(d).


 


 


 


 


 






    	 	9	 



     

    

 


“Tangible
Shareholders’ Equity” means the shareholders’ equity of the Company as of immediately prior to the Closing
on the Closing Date, determined in accordance with GAAP and this Agreement, excluding all goodwill and intangible assets as recorded
on the books and records of the Company.


 


“Tax”
means (i) any net income, alternative or add-on minimum tax, gross income, gross receipts, sales, use, ad valorem, value
added, capital stock, franchise, profits, license, withholding, payroll, Social Security, Medicare, employment, unemployment, disability,
excise, severance, stamp, occupation, premium, property, environmental, or windfall profit tax, custom, duty, or other tax, together
with any interest, penalty, or addition to tax or additional amount imposed by any Governmental Body responsible for the imposition
of any such tax (federal, state, local, or foreign), (ii) any liability of the Company for the payment of any amounts of the type
described in clause (i) as a result of being a member of an affiliated, consolidated, combined, or unitary group for any period
prior to the Closing, or (iii) any liability of the Company for the payment of any amounts of the type described in clause (i)
as a result of any express or implied obligation to indemnify any other Person, exclusive of the indemnity obligations set forth
in this Agreement.


 


“Tax Claim”
is defined in Section 7.1(f).


 


“Tax Return”
means any return (including any information return), report, statement, schedule, notice, form, or other document or information
filed with or submitted to, or required to be filed with or submitted to, any Governmental Body in connection with the determination,
assessment, collection, or payment of any Tax or in connection with the administration, implementation, or enforcement of or compliance
with any Legal Requirement relating to any Tax since December 31, 2002.


 


“Termination
Date” is defined in Section 10.1(c).


 


“Term Loan”
means the term loan made by Arvest Bank to the Company, loan number 4335344, pursuant to the applicable Contract, note, and/or
similar instrument by or between the Company and Arvest Bank.


 


“Terms and
Conditions” is defined in Section 3.21(g).


 


“Territory”
means each state and territory of the United States of America.


 


“Third Party
Claim” is defined in Section 11.3(a).


 


A claim, Proceeding,
dispute, action, or other matter will be deemed to have been “Threatened” if any demand or statement has been
made in writing or any notice has been given in writing.


 


“Transaction
Documents” means this Agreement, the Employment Agreements, and the Promissory Note.


 


“Transaction
Expenses” is defined in Section 12.1.


 


 


 


 


 


 


 


 


 


 


 






    	 	10	 



     

    

 


“Trusts”
is defined in the Preamble to this Agreement.


 


“Websites”
means any and all Internet addresses, domain names, uniform resource locators, and websites owned, operated, or licensed by or
for the benefit of the Company in connection with its business, including any content contained thereon or related thereto.


 


ARTICLE
2

SALE AND PURCHASE OF SHARES; CLOSING


 


2.1             
Sale and Purchase of Shares. Subject to the terms and conditions of this Agreement, at the Closing, each
Seller shall sell, assign, transfer, convey, and deliver to the Buyer the Shares owned by such Seller, free and clear of all Encumbrances,
and the Buyer shall purchase the Shares from the Sellers.


 


2.2             
Purchase Price; Payment of Purchase Price and Closing Date Revolving Loan Amount; Closing Payment Certificate.


 


(a)           
The aggregate purchase price (the “Purchase Price”) for the Shares shall be the sum of $56,020,000.


 


(b)           
At the Closing:


 


(i)                
the Purchase Price shall be paid by the Buyer as follows: (A) the Transaction Expenses shall be paid by wire transfer
of immediately available funds to such parties, in such amounts, and to such bank accounts as specified in the Closing Payment
Certificate; (B) $10,000,000 payable by Subordinated Promissory Note in the form attached hereto as Exhibit B (the “Promissory
Note”); (C) the Closing Term Loan Payment Amount shall be paid by wire transfer of immediately available funds to such
account(s) as specified in the Closing Payment Certificate; (D) the aggregate amount necessary to satisfy and extinguish the aggregate
amount owed under the Closing Date Revolving Loan Amount not attributable to inventory purchases, the assumption or creation of
leasehold interests (including all build-out and capital improvements in connection therewith), bankruptcy proceedings, and other
costs arising from the Hastings Project shall be paid by wire transfer of immediately available funds to such account as specified
in the Closing Payment Certificate; and (E) the remainder of the Purchase Price (the “Closing Shareholder Payment Amount”)
shall be paid to the Sellers in such amounts as specified in the Closing Payment Certificate, by wire transfer of immediately available
funds to the accounts specified in the Closing Payment Certificate; and


 


(ii)             
the Buyer shall pay, at its sole cost, by wire transfer of immediately available funds to such account as specified
in the Closing Payment Certificate, the amount necessary to satisfy and extinguish the aggregate amount owed under the Closing
Date Revolving Loan Amount attributable to inventory purchases, the assumption or creation of leasehold interests (including all
build-out and capital improvements in connection therewith), bankruptcy proceedings, and other costs arising from the Hastings
Project.


 


(c)           
Not later than one Business Day prior to the Closing, the Sellers’ Representative will furnish to the Buyer a certificate
(the “Closing Payment Certificate”), signed by the Persons who then serve as the President and Secretary of
the Company, the Sellers’ Representative, and each of the Sellers, dated the Closing Date, that sets forth:


 


 


 


 






    	 	11	 



     

    

 


(i)                
the Transaction Expenses of the Company to be paid pursuant to Section 2.2(b)(i)(A) (which shall constitute
all Transaction Expenses of the Company and the Sellers unpaid as of the Closing), each Person entitled to a payment thereof, the
amount of the payment due to such Person, and the wire instructions for such Person;


 


(ii)             
each Seller’s share of the Closing Shareholder Payment Amount to be paid pursuant to Section 2.2(b)(i)(E)
and the wire instructions for each Seller;


 


(iii)           
the Closing Term Loan Payment Amount and the wire instructions for the payoff thereof;


 


(iv)            
the Closing Date Revolving Loan Amount and the wire instructions for the payoff thereof; and


 


(v)              
the aggregate amount owed under the Closing Date Revolving Loan Amount attributable to inventory purchases, the assumption
or creation of leasehold interests (including all build-out and capital improvements in connection therewith), bankruptcy proceedings,
and other costs arising from the Hastings Project, specifying in reasonable detail the underlying costs included in such aggregate
amount.


The Buyer will be entitled
to rely conclusively on the amounts and other information set forth in the Closing Payment Certificate.


 


2.3             
Closing. The closing of the transactions contemplated by this Agreement (the “Closing”)
shall take place at such time on the date hereof following the satisfaction or waiver of all conditions to the Closing set forth
in Article 8 and Article 9 (other than those conditions that by their nature have to be satisfied at the Closing),
or at such other time and date as the Buyer and the Sellers’ Representative may agree.


 


ARTICLE
3

REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SELLERS


 


Except as set forth
in the Disclosure Schedules delivered by the Company and the Sellers, the Company (without any liability under Section 7.1
or Article 11 following the Closing) and the Sellers, jointly and severally, represent and warrant to the Buyer as of date
hereof as set forth below in this Article 3. For the purposes of the representations and warranties set forth in this Article
3, all representations and warranties shall be deemed made with respect to periods beginning on or after December 31, 2002,
unless a shorter period is expressly set forth within this Article 3, in which case the shorter time period shall apply
with respect to such matter as to which it pertains; provided, however, that unless a shorter period is expressly
set forth within this Article 3, to the actual knowledge of Rodney Spriggs, Kenneth Caviness, or Steven Wilcox, all of the
representations and warranties set forth in this Article 3 are true and correct with respect to periods before December
31, 2002. Each exception set forth in the Disclosure Schedules is identified by reference to, or has been grouped under a heading
referring to, a specific individual Section of this Agreement and relates only to such Section and such other Section for which
it is readily apparent from the face of such disclosure that it also relates to such other Section.


 


 


 






    	 	12	 



     

    

 


3.1             
Organization and Good Standing; Trust Matters. 


 


(a)           
The Company is a corporation duly organized, validly existing, and in good standing under the laws of the State of Missouri,
with all requisite corporate power and authority to conduct its business as it is currently conducted and to own, lease, or use
the properties and assets that it purports to own, lease, or use. The Company is duly qualified to do business as a foreign corporation
and is in good standing under the laws of each state or other jurisdiction in which either the ownership or use of the properties
owned or used by it, or the nature of the activities conducted by it, requires such qualification, except in such jurisdictions
in which the individual or collective failures to be so qualified do not constitute and would not reasonably be expected to result
in a Material Adverse Effect.


 


(b)           
Each Trust was duly formed as a trust and is validly existing under the laws of its jurisdiction of its formation. Each
trustee thereof has full power and authority, as trustee, (i) to own and operate the properties that he holds in trust, (ii) to
conduct, as historically conducted, the relevant businesses that he holds in trust, (iii) to perform the obligations under contracts
by which he, as trustee, is bound, and (iv) to own the Shares that he holds in trust. The copy of each relevant trust agreement
that has been furnished to the Buyer reflects all amendments made thereto at any time prior to the date of this Agreement and is
correct and complete. None of the five trustees is in default under or in violation of any provision of his respective trust agreement.
The Person named on the signature page hereto as the trustee of each relevant Trust is the sole trustee thereof and has the power
and authority, as trustee of such Trust, to execute and deliver this Agreement and each other document contemplated hereby.


 


3.2             
Authority; No Conflict.


 


(a)           
This Agreement has been duly executed and delivered by the Company and the Sellers and constitutes the legal, valid, and
binding obligation of the Company and the Sellers, enforceable against the Company and each Seller in accordance with its terms,
except as enforcement thereof may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization, or similar laws
relating to creditors’ rights generally and by equitable principles. Upon the execution and delivery by the Sellers and the
Company of each other Transaction Document to which any of them is a party, such Transaction Documents will constitute the legal,
valid, and binding obligations of the Sellers and the Company, as applicable, enforceable against the Sellers or the Company in
accordance with their respective terms, except as enforcement thereof may be limited by bankruptcy, insolvency, fraudulent conveyance,
reorganization, or similar laws relating to creditors’ rights generally and by equitable principles. The Company and each
Seller has the requisite power and authority to execute and deliver the Transaction Documents to which it or he is a party and
to perform its or his respective obligations thereunder.


 


(b)           
Except as set forth in Section 3.2(b) of the Disclosure Schedules and to the extent it, individually or in the aggregate,
would not result in a Material Adverse Effect, neither the execution and delivery of this Agreement nor the consummation or performance
of any of the Contemplated Transactions by the Company or any of the Sellers will, directly or indirectly (with or without notice
or lapse of time):


 


 


 






    	 	13	 



     

    

 


(i)                
contravene, conflict with, or result in a violation of, (A) any provision of the Organizational Documents of the
Company or, with respect to any Seller that is a trust, any of the terms of such trust’s trust agreement or other formation
documents or (B) any resolution adopted by the Board of Directors or the shareholders of the Company;


 


(ii)             
contravene, conflict with, or result in a violation of, or give any Governmental Body the right to challenge any
of the Contemplated Transactions, exercise any remedy, or obtain any relief under, any Legal Requirement to which the Company,
any Seller, any of the assets owned, leased, or used by the Company, or the Shares may be subject;


 


(iii)           
contravene, conflict with, or result in a violation of any of the terms of, or give any Governmental Body the right
to revoke, withdraw, suspend, cancel, terminate, or modify, any Governmental Authorization that is held by the Company or that
otherwise relates to the Shares or the business of, or any of the assets owned, leased, or used by, the Company;


 


(iv)            
contravene, conflict with, or result in a violation or breach of any provision of, or give any Person the right to
declare a default or exercise any remedy under, to accelerate the maturity or performance of, or to cancel, or terminate any Contract
to which the Company or any Seller is bound or to which the Shares are subject;


 


(v)              
result in the imposition or creation of any Encumbrance upon or with respect to any of the assets owned, leased,
or used by the Company or the Shares, except with respect to the Financing; or


 


(vi)            
contravene, conflict with, or result in a violation, breach, or acceleration of, any provision of any employment
agreement between the Company and any employee of the Company.


 


Except as set forth in Section 3.2(b)
of the Disclosure Schedules, neither the Company nor any Seller is or will be required to give any notice to or obtain any
Consent from any Person in connection with the execution and delivery of this Agreement or the consummation or performance of any
of the Contemplated Transactions.


 


3.3             
Capitalization. Section 3.3 of the Disclosure Schedules sets forth (i) the authorized shares of
capital stock of the Company, (ii) the issued and outstanding shares of capital stock of the Company, and (iii) the name of each
Person holding issued and outstanding shares of capital stock of the Company and the number and class of issued and outstanding
shares of capital stock of the Company held by each such Person. The Shares constitute all of the issued and outstanding shares
of capital stock of the Company. The Sellers are and will be on the Closing Date the record and beneficial owner and holder of
all of the Shares. The Shares are free and clear of all Encumbrances. The Shares are duly authorized, validly issued, fully paid,
and nonassessable, and were issued in all material respects in conformity with all applicable state and federal securities Legal
Requirements. Other than the Shares, the Company has no equity securities (or securities convertible into equity securities) issued,
reserved for issuance, or outstanding. There are no existing options, warrants, calls, rights, subscriptions, arrangements, claims,
commitments (contingent or otherwise), or other Contracts of any character to which the Company or any Seller is a party, or is
otherwise subject, requiring, and there are no securities of the Company outstanding that upon conversion or exchange would require,
the issuance, sale, or transfer of any additional shares of capital stock or other securities of the Company that are convertible
into, exchangeable for, or evidencing the right to subscribe for or purchase, capital stock or any other securities of the Company.
Except as set forth in Section 3.3 of the Disclosure Schedules, neither the Company nor any Seller is a party, or is otherwise
subject, to any voting trust or other voting agreement with respect to any of the capital stock of the Company or to any agreement,
arrangement, or commitment relating to dividend rights or the issuance, sale, redemption, transfer, repurchase, acquisition, or
other disposition or the registration of the capital stock of the Company, or any preemptive rights with respect thereto. None
of the Shares were issued in violation of any preemptive, subscription, or other similar rights under any provision of applicable
Legal Requirements, the Company’s Organizational Documents, or any Contract to which the Company is subject. The Company
neither owns, nor has a Contract to acquire, any securities or any direct or indirect equity or ownership interest in any Person.


 


 


 






    	 	14	 



     

    

 


3.4             
Financial Statements.


 


(a)           
The Company has delivered to the Buyer (i) the balance sheets of the Company as at December 31, 2013, December 31, 2014,
and December 31, 2015, and the related statements of earnings and cash flows of the Company for the fiscal years then ended, (ii)
the unaudited balance sheets as of June 30, 2016 and June 30 2015, and the related statements of earnings and cash flows of the
Company for the three (3) and six (6) months then ended, and (iii) the unaudited balance sheet of the Company as of September 30,
2016 (all such financial statements, together with the Closing Date Balance Sheet, are collectively referred to as the “Financial
Statements”). The unaudited balance sheet of the Company as of September 30, 2016 is referred to herein as the “Interim
Balance Sheet” and the date thereof as the “Interim Balance Sheet Date”. Except as set forth in Section
3.4(a) of the Disclosure Schedules, the Financial Statements: (A) have been prepared in accordance with GAAP applied on a consistent
basis throughout the period involved, subject, in the case of the interim Financial Statements, to normal and recurring year-end
adjustments (the effect of which will not be materially adverse) and, in the case of all of the Financial Statements, the absence
of notes, (B) are derived from and are in accordance with the books and records of the Company, and (C) fairly present the financial
condition, results of operations, and cash flows of the Company as of the respective dates of and for the periods then ended. There
are no off balance sheet transactions, arrangements, or obligations of or involving the Company.


 


(b)           
Except as set forth in Section 3.4(b) of the Disclosure Schedules, the Company makes and keeps accurate financial
books and records reflecting its assets and maintains commercially reasonable internal accounting controls that provide reasonable
assurance that (i) transactions are executed with management’s authorization; (ii) transactions are recorded as necessary
to permit preparation of the financial statements of the Company and to maintain accountability for the Company’s assets;
(iii) access to the assets of the Company is permitted only in accordance with management’s authorization; (iv) the reported
accountability of the assets of the Company is compared with existing assets at reasonable intervals; and (v) accounts and
other receivables and inventory are recorded accurately in all material respects, and commercially reasonable procedures are implemented
to effect the collection thereof on a current and timely basis.


 


 


 


 


 






    	 	15	 



     

    

 


(c)           
Except as set forth in Section 3.4(c) of the Disclosure Schedules, the financial books and records of the Company
are sufficient such that the Financial Statements can be audited without a scope limitation, by an independent certified public
accounting firm that is registered under the Public Company Accounting Oversight Board. The Company maintains a standard system
of accounting established and administered in accordance with GAAP.


 


3.5             
Books and Records. Except as set forth in Section 3.5 of the Disclosure Schedules, the books of
account, minute books, and stock record books of the Company, all of which have been made available to the Buyer or its Representatives,
are complete and correct in all material respects and have been maintained in accordance with sound business practices. Except
as set forth in Section 3.5 of the Disclosure Schedules, the minute books of the Company contain accurate and complete
records in all material respects of all meetings held of, and actions taken by, the shareholders and Board of Directors of the
Company, and no meeting of any such shareholders or Board of Directors has been held for which minutes have not been prepared
and are not contained in such minute books, except for any meeting at which no material decision or action was made or taken.
Except as set forth in Section 3.5 of the Disclosure Schedules, at the Closing, the Company will be in possession of all
of its books and records. No Seller or any Affiliate thereof (other than the Company) has any books or records that relate in
any material respect to the operations, decision-making, policies, and management of the Company.


 


3.6             
Title to Properties; Leased Real Property.


 


(a)           
The Company, since January 1, 2005, has never owned and currently does not own any real property. The Company owns all the
properties and assets (whether tangible or intangible) reflected as owned in its books and records. All material properties and
assets owned by the Company are free and clear of all Encumbrances, except liens for Taxes not yet delinquent that are accrued
on the Company’s most recent Financial Statements and Encumbrances with respect to the Revolving Loan and Term Loan.


 


(b)           
Neither the Company, nor to the Knowledge of the Company, any other party to any Real Property Lease has violated any provision
of, or committed or failed to perform any act that, with notice, lapse of time, or both, would constitute a default under the provisions
of, any of the Real Property Leases except as would not have a Material Adverse Effect. Section 3.6(b) of the Disclosure Schedules
includes a list of all Real Property Leases, the address of the underlying Leased Real Property, the parties to the Real Property
Leases, the base rental amount currently being paid under each Real Property Lease, and the expiration of the term of each Real
Property Lease. To the Knowledge of the Company, the Company has a good and valid leasehold interest in the real property leased
by the Company that is subject to the Real Property Leases (the “Leased Real Property”). The Company has not
subleased, licensed, or otherwise granted any Person the right to use or occupy any Leased Real Property. The Company has not collaterally
assigned or granted any other security interest in any Real Property Lease, except with respect to the Revolving Loan. To the Knowledge
of the Company, there are no outstanding obligations regarding construction or other work or installations to be performed by or
on behalf of the Company at the Leased Real Property except for obligations that have been reasonably reserved for. The Leased
Real Property constitutes all real property used or held for use in the conduct of the business of the Company. To the Knowledge
of the Company, there are no oral agreements regarding the use or occupancy of the Leased Real Property. To the Knowledge of the
Company, the use and operation of the Leased Real Property in the conduct of the Company’s business do not violate in any
material respect any Legal Requirement, covenant, condition, restriction, easement, license, permit, or agreement. To the Knowledge
of the Company, there are no Proceedings pending nor Threatened against or affecting the Leased Real Property or any portion thereof
or interest therein in the nature or in lieu of condemnation or eminent domain proceedings.


 


 


 


 






    	 	16	 



     

    

 


(c)           
To the Knowledge of the Company, there are no conditions affecting any of the Improvements or Leased Real Property that
would, individually or in the aggregate, interfere with the use or occupancy of the Leased Real Property or any portion thereof
in the operation of the business of the Company, except as would not have a Material Adverse Effect. For the purposes hereof, “Improvements”
shall mean all buildings, structures, improvements, trade fixtures, and building systems, located on Leased Real Property that
are owned by the Company, regardless of whether title to such Improvements are subject to reversion to the landlord or other third
party upon the expiration or termination of such Real Property Lease.


 


3.7             
Condition of Assets. The Improvements, vehicles, and other items of tangible personal property of the
Company are structurally sound, are in reasonably good operating condition and repair, and are adequate in all material respects
for the uses to which they are being put, and none of such Improvements, vehicles, and other items of tangible personal property
is in need of maintenance or repairs except for ordinary, routine maintenance, and repairs that are not material in nature or
cost.


 


3.8             
Accounts Receivable. All accounts receivable of the Company that are reflected on the Interim Balance
Sheet, or on the accounting records of the Company as of the Closing Date (collectively, the “Accounts Receivable”),
represent or will represent valid obligations arising from Contracts actually entered into, sales actually made, or services actually
performed in the Ordinary Course of Business and Section 3.8 to the Disclosure Schedules sets forth a true, correct, and
complete aging schedule of Accounts Receivable as of the Interim Balance Sheet Date and to the Knowledge of the Company, all Accounts
Receivable can reasonably be anticipated to be paid in full, without any set-off, except with respect to Accounts Receivable shown
in the aging schedule set forth in Section 3.8 of the Disclosure Schedules as aging past 90 days. There is no contest,
claim, or right of set-off, other than returns in the Ordinary Course of Business, under any Contract with any obligor of an Accounts
Receivable relating to the amount or validity of such Accounts Receivable.


 


3.9             
Inventory. All inventory of the Company consists of a quality and quantity reasonably usable and salable
in the Ordinary Course of Business, except for obsolete items and items of below-standard quality (all of which have been written
off or written down to net realizable value on the accounting records of the Company or for which adequate reserves have been
established) or other defects or changes in inventory that are not likely to result in a Material Adverse Effect. To the Knowledge
of the Company, all inventories not written off have been priced on an average cost basis. All inventory of the Company is owned
by the Company free and clear of all Encumbrances (except with respect to the Revolving Loan or Term Loan), and no inventory is
held on a consignment basis. The quantities of each item of inventory are not excessive, but are reasonable in the present circumstances
of the Company.


 


 


 


 


 


 


 






    	 	17	 



     

    

 


3.10         
No Undisclosed Liabilities. Except as would not reasonably be expected to have a Material Adverse Effect,
the Company has no liabilities of any nature (whether known or unknown and whether absolute, accrued, contingent, or otherwise)
except for (i) liabilities adequately reflected or reserved against in the Interim Balance Sheet, (ii) liabilities incurred in
the Ordinary Course of Business since the Interim Balance Sheet Date and that are not material in amount, and (iii) liabilities
for Transaction Expenses.


 


3.11         
Taxes.


 


(a)           
At all times since December 31, 2002, (i) the Company has been a validly electing “S corporation” within the
meaning of IRC §1361 not subject to federal, state, or local income Tax and (ii) none of the Sellers has taken any position
on any Tax Return, nor has there been any act or omission by any Seller, that could form the legal basis for any revocation or
invalidity of said S corporation election. Each Seller is an eligible S corporation shareholder under the applicable sections of
the IRC. To the Knowledge of the Company, none of the Sellers is liable for and has no potential liability for any Tax under IRC
§1374, nor will any Seller be liable for any Tax under IRC §1374 in connection with the deemed sale of assets caused
by the Section 338(h)(10) Election.


 


(b)           
Except as set forth in Section 3.11(b)(i) of the Disclosure Schedules, since December 31, 2002, the Company has duly
and timely filed all Tax Returns required to be filed by it (taking into account all valid applicable extensions) pursuant to applicable
Legal Requirements. All such Tax Returns are true, correct, and complete in all material respects. The Company has delivered to
the Buyer or its Representatives copies of all such Tax Returns filed for Tax years 2011-2015. Section 3.11(b)(ii) of the Disclosure
Schedules contains a complete and accurate list of all income Tax Returns filed by the Company for Tax years 2011-2015. The
Company has paid, or made provision for the payment of, all Taxes that have become due pursuant to all Tax Returns or otherwise,
or pursuant to any assessment received by the Company from a Governmental Body.


 


(c)           
No Seller or director or executive officer of the Company expects any authority to assess any additional Taxes for any period
for which Tax Returns have been filed. Except as set forth in Section 3.11(c) of the Disclosure Schedules, no Tax audits
or administrative or judicial Tax Proceedings are pending or being conducted with respect to the Company. Except as set forth in
Section 3.11(c) of the Disclosure Schedules, since December 31, 2002, (i) the Company has not received from any taxing authority
(including jurisdictions where the Company has not filed Tax Returns) any (A) notice indicating an intent to open an audit or other
review or (B) request for information related to Tax matters; (ii) the Company’s Tax Returns have not been audited by the
relevant tax authorities; (iii) the Company has made no adjustments to the United States federal and state income Tax Returns and
all other Tax Returns filed by the Company; and (iv) the Company has not given or been requested to give waivers or extensions
(or is or would be subject to a waiver or extension given by any other Person) of any statute of limitations relating to the payment
of Taxes of the Company or for which the Company may be liable.


 


 


 


 


 


 


 


 


 






    	 	18	 



     

    

 


(d)           
The charges, accruals, and reserves with respect to Taxes on the books of the Company are at least equal to the Company’s
liability for Taxes (including (i) deferred Taxes and (ii) Taxes of the Company owed and not paid for any period through and including
the date of this Agreement and, at Closing, through and including the Closing Date). There exists no proposed Tax assessment against
the Company. To the Knowledge of the Company and except as set forth in Section 3.11(d) of the Disclosure Schedules, since
December 31, 2002, no claim has been made by any Governmental Body in a jurisdiction where the Company does not file Tax Returns
that the Company is or may be subject to taxation by that jurisdiction. There are no liens for Taxes (other than for Taxes not
yet due and payable and for which adequate reserves are provided) upon any of the assets of the Company.


 


(e)           
(i) No property owned by the Company, to the Knowledge of the Company, is “tax exempt use property” within the
meaning of IRC §168(h), (ii) the Company is not a party to any lease made pursuant to IRC §168(f)(8), and (iii) the Company
has not agreed and is not required to make any adjustment under IRC §481(a) by reason of a change in method of accounting
or otherwise that will affect the liability of the Company for Taxes, and there is no application pending with any Governmental
Body requesting permission for any changes in any of its accounting methods for Tax purposes, nor has any Governmental Body proposed
any such adjustment or change in the Company’s accounting method.


 


(f)            
Since December 31, 2002, the Company has withheld and paid all Taxes required by law to have been withheld, collected, and
paid and has complied in all respects with all Legal Requirements relating to the withholding, collection, or remittance of Taxes
(including employee-related Taxes).


 


(g)           
The Company is not a party to any Contract or arrangement that, individually or collectively, would give rise to any payment
(whether in cash or property) that would not be deductible pursuant to IRC §§162(a)(1), 162(m), 162(n), or 280G.


 


(h)           
None of the Sellers or the Company is a foreign person within the meaning of IRC §1445.


 


(i)             
(i) The Company is not a party to any Tax allocation, indemnity, or sharing agreement; (ii) the Company does not have any
liability for Taxes of any Person (A) under Treasury Regulation §1.1502-6, (B) as transferee or successor, (C) by Contract,
or (D) otherwise; and (iii) the Company has not been a member of an “affiliated group” (as that term is defined in
the IRC) filing a consolidated federal income Tax return.


 


(j)             
To the Knowledge of the Company, the Company will not be required to include any item of income in, or exclude any item
of deduction from, taxable income for any taxable period (or portion thereof) ending after the Closing Date as a result of any:


 


 


 


 


 


 






    	 	19	 



     

    

 


(i)                
change in method of accounting for a taxable period ending on or prior to the Closing Date;


 


(ii)             
“closing agreement” as described in IRC §7121 (or any corresponding or similar provision of state,
local, or foreign income Tax law) executed on or prior to the Closing Date;


 


(iii)           
intercompany transaction or excess loss account described in Treasury Regulations under IRC §1502 (or any corresponding
or similar provision of state, local, or foreign income Tax law);


 


(iv)            
installment sale or open transaction disposition made on or prior to the Closing Date; or


 


(v)              
prepaid amount received on or prior to the Closing Date.


 


(k)           
The Company has disclosed on its Tax Returns all positions taken therein that could give rise to a substantial understatement
of Tax under IRC §6662.


 


(l)             
The Company has not distributed stock of another entity nor had its stock distributed by another entity in a transaction
that was purported or intended to be governed by IRC §355.


 


(m)         
The Company is not, and has not been, a party to, or a promoter of, a “reportable transaction” within the meaning
of IRC §6707A(c)(1) of the Code and Treasury Regulations Section 1.6011 4(b).


 


3.12         
Employee Benefits.


 


(a)           
Section 3.12(a) of the Disclosure Schedules contains a true and complete list of each pension, benefit, retirement,
compensation, employment, consulting, profit-sharing, deferred compensation, incentive, bonus, performance award, phantom equity,
stock or stock-based, change in control, retention, severance, vacation, paid time off, welfare, fringe-benefit, and other similar
agreement, plan, policy, program, or arrangement (and any amendments thereto), in each case whether or not reduced to writing and
whether funded or unfunded, including each “employee benefit plan” within the meaning of Section 3(3) of ERISA, whether
or not tax-qualified and whether or not subject to ERISA, which is or has been maintained, sponsored, or contributed to by the
Company for the benefit of any current or former employee, officer, director, retiree, independent contractor, or consultant of
the Company or any spouse or dependent of such individual, or under which the Company or any of its ERISA Affiliates has or with
respect to which the Buyer or any of its Affiliates would reasonably be expected to have any liability, contingent or otherwise,
other than employment agreements and employment offer letters (as required to be listed on Section 3.12(a) of the Disclosure
Schedules, each, a “Benefit Plan”).


  


(b)           
Each Benefit Plan has been maintained, administered, and operated in compliance in all material respects with its terms
and the applicable requirements of ERISA, the IRC, and other applicable Legal Requirements.


 


 


 


 


 


 


 


 


 






    	 	20	 



     

    

 


(c)           
Neither this Agreement nor the consummation of the Contemplated Transactions will result in the Company becoming liable
for or otherwise obligated under any Benefit Plan other than the Employment Agreements.


 


(d)           
Except as set forth in Section 3.12(d) of the Disclosure Schedules and other than as required under Section 601 et.
seq. of ERISA no Benefit Plan provides post-termination or retiree welfare benefits to any individual for any reason, and the Company
does not have any liability or obligation to provide post-termination or retiree welfare benefits to any individual, nor has the
Company ever represented, promised, or contracted to any individual that such individual would be provided with post-termination
or retiree welfare benefits.


 


3.13         
Compliance; Governmental Authorizations.


 


(a)           
Except as set forth in Section 3.13(a) of the Disclosure Schedules, since December 31, 2002, unless a later date
is specified in this Section 3.13(a) with respect to a particular subsection of this Section 3.13, in which case
the latter date shall apply:


 


(i)                
the Company is, and at all times has been, in compliance with each Legal Requirement that is or was applicable to
it or to the conduct or operation of its business or the ownership, lease, or use of any of its assets, except with respect to
non-compliance that, individually or in the aggregate, has not resulted or would not reasonably be expected to result in a Material
Adverse Effect;


 


(ii)             
no event has occurred or circumstance exists that does or would (with or without notice or lapse of time) (A) constitute
or result in a violation by the Company of, or a failure on the part of the Company to comply with, any Legal Requirement that,
individually or in the aggregate, has resulted or would reasonably be expected to result in a Material Adverse Effect or (B) give
rise to any obligation on the part of the Company to undertake, or to bear all or any portion of the cost of, any remedial action
of any nature that, individually or in the aggregate, has resulted or would reasonably be expected to result in a Material Adverse
Effect; and


 


(iii)           
the Company has not received since December 31, 2010 any notice or other written communication from any Governmental
Body or any other Person regarding, with respect to the business of the Company, (A) any actual, alleged, or potential violation
of, or failure to comply with, any Legal Requirement or (B) any actual, alleged, or potential obligation on the part of the Company
to undertake, or to bear all or any portion of the cost of, any remedial action of any nature.


 


(b)           
Section 3.13(b) of the Disclosure Schedules contains a complete and accurate list of each material Governmental Authorization
that is held by the Company. Each Governmental Authorization listed or required to be listed in Section 3.13(b) of the Disclosure
Schedules is valid and in full force and effect. Except as set forth in Section 3.13(b) of the Disclosure Schedules:


 


(i)                
the Company is, and at all times has been, in compliance in all material respects with all of the terms and requirements
of each Governmental Authorization listed or required to be listed in Section 3.13(b) of the Disclosure Schedules, except
where such non-compliance, individually or in the aggregate, has not resulted and would not reasonably be expected to result in
a Material Adverse Effect;


 


 


 


 


 






    	 	21	 



     

    

 


(ii)             
no event has occurred or circumstance exists that does or would (with or without notice or lapse of time) (A) constitute
or result, directly or indirectly, in a violation of or a failure to comply in any material respect with any term or requirement
of any Governmental Authorization listed or required to be listed in Section 3.13(b) of the Disclosure Schedules or (B)
result, directly or indirectly, in the revocation, withdrawal, suspension, cancellation, or termination of, or any modification
to, any Governmental Authorization listed or required to be listed in Section 3.13(b) of the Disclosure Schedules;


 


(iii)           
the Company has not received any notice or other communication (whether oral or written) from any Governmental Body
regarding (A) any actual, alleged, possible, or potential violation of or failure to comply with any term or requirement of any
Governmental Authorization or (B) any actual, proposed, possible, or potential revocation, withdrawal, suspension, cancellation,
or termination of, or material modification to, any Governmental Authorization; and


 


(iv)            
all applications required to have been filed for the renewal of the Governmental Authorizations listed or required
to be listed in Section 3.13(b) of the Disclosure Schedules or the transfer of the Governmental Authorizations listed or
required to be listed in Section 3.13(b) of the Disclosure Schedules have been duly filed on a timely basis with the appropriate
Governmental Bodies, and all other filings required to have been made with respect to such Governmental Authorizations have been
duly made on a timely basis with the appropriate Governmental Bodies, except where such failure to file, individually or in the
aggregate, has not resulted and would not reasonably be expected to result in a Material Adverse Effect.


The Governmental Authorizations listed
in or required to be listed in Section 3.13(b) of the Disclosure Schedules collectively constitute all of the Governmental
Authorizations necessary to permit the Company to lawfully conduct and operate its business in all material respects in the manner
it currently conducts and operates such business and to permit the Company to own, lease, and use its assets in all material respects
in the manner in which it currently owns, leases, and uses such assets.


 


3.14         
Legal Proceedings; Orders.


 


(a)           
Except as set forth in Section 3.14(a) of the Disclosure Schedules, there is no pending and ongoing Proceeding:


 


(i)                
that has been commenced by or against the Company or any Seller with respect to the Company or, to the Knowledge
of the Company, that otherwise relates to or may affect the business of, or any of the assets owned, leased, or used by, the Company;
or


 


(ii)             
against the Company or any Seller that challenges, or would reasonably be expected to prevent, or make illegal, any
of the Contemplated Transactions.


 


 


 


 


 


 






    	 	22	 



     

    

 


Except as set forth in Section 3.14(a)
of the Disclosure Schedules, to the Knowledge of the Company, no such Proceeding has been Threatened, and no event has occurred
or circumstances exist that may give rise to or serve as a basis for the commencement of any such Proceeding. The Company has made
available to Buyer or its counsel copies of all pleadings, correspondence, and other documents relating to each Proceeding listed
or required to be listed in Section 3.14(a) of the Disclosure Schedules.


 


(b)           
Except as set forth in Section 3.14(b) of the Disclosure Schedules:


 


(i)                
to the Knowledge of the Company, there is no Order to which the Company, or any of the assets owned, leased, or used
by the Company, is subject that would materially interfere with the Company’s use of such assets in the manner in which it
currently owns, leases, and uses such assets;


 


(ii)             
no Seller is subject to any Order that relates to the business of, or any of the assets owned, leased, or used by,
the Company; and


 


(iii)           
to the Knowledge of the Company, no officer, director, or employee of the Company is subject to any Order that prohibits
such Person from engaging in, or continuing any conduct, activity, or practice relating to, the business of the Company.


 


(c)           
Except as set forth in Section 3.14(c) of the Disclosure Schedules and, unless a later date is specified in this
Section 3.14(c) with respect to a particular subsection of this Section 3.14(c), in which case the latter date shall
apply, since December 31, 2002:


 


(i)                
the Company is, and, to the Knowledge of the Company, at all times has been, in compliance in all material respects
with all of the terms and requirements of each Order to which it, or any of the assets owned by it, is or has been subject;


 


(ii)             
to the Knowledge of the Company, no event has occurred or circumstance exists that does or would constitute or result
in (with or without notice or lapse of time) a violation of or failure to comply in any material respect with any term or requirement
of any Order to which the Company, or any of the assets owned by the Company, is subject; and


 


(iii)           
to the Knowledge of the Company, the Company has not received any notice or other communication (whether oral or
written) from any Governmental Body or any other Person regarding any actual, alleged, possible, or potential violation of, or
failure to comply with, any term or requirement of any Order to which the Company, or any of the assets owned, leased, or used
by the Company, is or has been subject.


 


3.15         
Absence of Certain Changes and Events. Since the Interim Balance Sheet Date, there has not been a Material
Adverse Effect with respect to the Company. The Company has not taken any steps, and does not currently expect to take any steps,
to seek protection pursuant to any bankruptcy law, nor does the Company have any Knowledge or reason to believe that its creditors
intend to initiate involuntary bankruptcy proceedings or any Knowledge of any fact that would reasonably lead a creditor to do
so. Except as set forth in Section 3.15 of the Disclosure Schedules, since the Interim Balance Sheet Date, the Company
has conducted its business only in the Ordinary Course of Business (except with respect to the Hastings Project) and there has
not been any:


 


 


 


 


 


 


 






    	 	23	 



     

    

 


(i)                
dividend or other distribution to any shareholder of the Company other than (A) cash distributions to the Sellers
in an aggregate amount necessary for the sole purpose of funding the 2015 and 2016 estimated and actual income Tax liabilities
of the Sellers in respect of their income of the Company, including Tax payments required to be paid by the Sellers pursuant to
Section 7.1 or 7.2 (exclusive of any indemnification payment obligations of the Sellers contained within Section
7.1(e)), and (B) any cash distribution permitted under Section 5.3(b);


 


(ii)             
payment or increase by the Company of any bonuses, salaries, or other compensation to any director, officer, or (except
in the Ordinary Course of Business) employee or entry into any employment, severance, or similar Contract with any director, officer,
or (except in the Ordinary Course of Business) employee;


 


(iii)           
adoption of, or material increase in the payments to or benefits under, any profit sharing, bonus, deferred compensation,
savings, insurance, pension, retirement, or other Benefit Plan for or with any employees of the Company;


 


(iv)            
damage to, or destruction or loss of, any asset or property owned, leased, or used by the Company, whether or not
covered by insurance, that, individually or in the aggregate, has resulted in or would reasonably be expected to result in a Material
Adverse Effect;


 


(v)              
termination of, or receipt of notice of termination of, any Contract where such termination has resulted in or would
reasonably be expected to result in a Material Adverse Effect;


 


(vi)            
sale (other than sales of inventory in the Ordinary Course of Business), lease, or other disposition of, any asset
or property owned, leased, or used by the Company or imposition of any Encumbrance on any asset or property owned, leased, or used
by the Company other than with respect to the Hastings Project, the Revolving Loan, the Term Loan, or in the Ordinary Course of
Business;


 


(vii)         
material change in the accounting methods used by the Company;


 


(viii)       
material amendment to the Organizational Documents of the Company;


 


(ix)            
incurrence of Indebtedness other than Indebtedness incurred in the Ordinary Course of Business under the Revolving
Loan;


 


(x)              
adoption of a plan or agreement of complete or partial liquidation, dissolution, restructuring, merger, consolidation,
recapitalization, or other reorganization;


 


(xi)            
issuance or sale of any shares of capital stock of the Company, or redemption, purchase, or other acquisition, directly
or indirectly, of any shares of capital stock of the Company or grant of any equity based awards;


 


 


 


 


 


 


 


 






    	 	24	 



     

    

 


(xii)         
termination of its status as an S corporation or any action by the Company to make, change, or rescind any Tax election,
amend any Tax Return, or take any position on any Tax Return, take any action, omit to take any action, or enter into any other
transaction that would have the effect of materially increasing the Tax liability or materially reducing any Tax asset of the Buyer
in respect of any Post-Closing Tax Period;


 


(xiii)       
incurrence of accounting, legal, or financial advisory fees or expenses outside the Ordinary Course of Business other
than the Transaction Expenses;


 


(xiv)        
extension of credit to any other Person by the Company (other than gift certificates, credit memos, or gift cards
arising in the Ordinary Course of Business);


 


(xv)          
capital expenditure in excess of $25,000, individually or in the aggregate, except with respect to the Hastings Project;


 


(xvi)        
failure to pay any outstanding invoice for goods or services purchased or used by the Company within 30 days of the
date of such invoice, unless a longer period of time is permitted for payment therein and then, within the period of time designated
for payment;


 


(xvii)     
failure to pay or reserve for any employee payroll costs for any payroll period ended on or before the Closing Date;
or


 


(xviii)   
Contract by the Company to do any of the foregoing.


 


3.16         
Contracts; No Defaults.


 


(a)           
Section 3.16(a) of the Disclosure Schedules contains a complete and accurate list as of the date hereof of each of
the following Contracts of the Company currently in effect (such Contracts, together with all Real Property Leases listed or otherwise
required to be disclosed in Section 3.6(b) of the Disclosure Schedules, the “Material Contracts”):


 


(i)                
each Contract that involves performance of services for or delivery of goods or materials by or to the Company in
excess of $50,000;


 


(ii)             
except for Contracts solely relating to trade receivables arising in the Ordinary Course of Business, any Contract
evidencing or providing for Indebtedness;


 


(iii)           
each Company IP Agreement;


 


(iv)            
each joint venture, partnership, and other Contract (however named) involving a sharing of profits, losses, costs,
or liabilities by the Company with any other Person;


 


(v)              
each Contract containing covenants that purport to restrict or limit the freedom of the Company or the Sellers to
compete with any Person with respect to the business of the Company;


 


 


 


 






    	 	25	 



     

    

 


(vi)            
each Contract (including options) to sell or otherwise dispose of the business of the Company (whether by merger,
consolidation, or other business combination, sale of securities, sale of assets, or otherwise), other than the sale of inventory
in the Ordinary Course of Business;


 


(vii)         
each Contract under which the Company is obligated to pay any amount in respect of indemnification obligations, purchase
price adjustment, or otherwise in connection with any (A) acquisition or disposition of assets or securities (other than the sale
of inventory in the Ordinary Course of Business), (B) merger, consolidation, or other business combination, or (C) series or group
of related transactions or events of the type specified in clauses (A) and (B) above;


 


(viii)       
each Contract under which the Company is, or may become, obligated to incur any severance pay or special compensation
obligations that would become payable by reason of this Agreement or the Contemplated Transactions;


 


(ix)            
each Contract to which the Company is a party or by which it is bound providing for payments to or by any Person
based on sales, purchases, or profits (other than direct payments for goods or services, payments pursuant to a Real Property Lease,
or payments to employees pursuant to a Benefit Plan or employment agreement or offer letter);


 


(x)              
each power of attorney granted by the Company (or any Seller in respect of the Company or any Shares) that is currently
effective and outstanding;


 


(xi)            
each Contract for capital expenditures by the Company in excess of $50,000;


 


(xii)         
each Contract providing for the employment of an individual on a full-time, part-time, consulting, or other basis
or otherwise providing compensation or other benefits to any officer, director, employee, or consultant (other than a Benefit Plan),
other than with respect to any employee that (A) is employed by the Company on an “at-will” basis (as that term is
defined by the applicable Legal Requirements), and (B) is not a director, executive officer, or key employee (which includes retail
location and district managers) of the Company;


 


(xiii)       
each collective bargaining agreement or other Contract to which the Company is a party with any labor organization;
and


 


(xiv)        
each amendment, supplement, and modification (whether oral or written) in respect of any of the foregoing.


 


(b)           
No Seller or executive officer, director, or, to the Knowledge of the Company, employee of the Company is bound by any Contract
that purports to limit the ability of such Person to (i) engage in, or continue any conduct, activity or practice relating to,
the business of the Company or (ii) assign to the Company any rights to any invention, improvement, or discovery.


 


(c)           
Each Material Contract is in full force and effect and is valid and enforceable against the Company and, to the Knowledge
of the Company, against all other parties thereto, in accordance with its terms, except as enforcement thereof may be limited by
bankruptcy, insolvency, fraudulent conveyance, reorganization, or similar laws relating to creditors’ rights generally or
by equitable principles.


 


 


 


 


 






    	 	26	 



     

    

 


(d)           
Except as set forth in Section 3.16(d) of the Disclosure Schedules and to the extent an event described in a subsection
to this Section 3.16(d), individually or in the aggregate, has not resulted in and would not reasonably be expected to result
in a Material Adverse Effect:


 


(i)                
the Company is and, since December 31, 2012, has been, in full compliance in all material respects with all applicable
terms and requirements of each Material Contract;


 


(ii)             
each other party to each Material Contract is, to the Knowledge of the Company, in full compliance with all applicable
terms and requirements of such Material Contract;


 


(iii)           
to the Knowledge of the Company, no event has occurred or circumstance exists that (with or without notice or lapse
of time) does or would contravene, conflict with, or result in a violation or breach of, or gives or would give the Company or
any other Person the right to declare a default or exercise any remedy under, or to accelerate the maturity or performance of,
or to cancel, terminate, or modify, any Material Contract; and


 


(iv)            
to the Knowledge of the Company, the Company (and, where applicable, a Seller) has not given or received from any
other Person any notice or other communication (whether oral or written) regarding any actual, alleged, or potential violation
or breach of, or default under, any Material Contract.


 


(e)           
There are no renegotiations of, attempts to renegotiate, or outstanding rights to renegotiate, any material amounts paid
or payable to the Company or with respect to the Company’s business under Material Contracts with any Person and no such
Person has made written demand for such renegotiation.


 


3.17         
Insurance.


 


(a)           
The Company has made available to the Buyer or its representatives true and complete copies of all policies of insurance
to which the Company is a party or under which the Company, or any director or officer of the Company (with respect to the business
of the Company), is covered. The Company has no pending applications for policies of insurance.


 


(b)           
All policies of insurance to which the Company is a party or that provide coverage to the Company, or any director or officer
of the Company (with respect to the business of the Company), to the Knowledge of the Company (i) are valid, outstanding, and enforceable;
(ii) are issued by an insurer that is financially sound and reputable; (iii) taken together, provide commercially reasonable insurance
coverage for the assets and the operations of the Company; (iv) are sufficient for compliance with all Legal Requirements and Contracts
to which the Company is a party or by which it is bound; and (v) will continue in full force and effect following the consummation
of the Contemplated Transactions.


 


 


 


 


 






    	 	27	 



     

    

 


(c)           
The Company has no Knowledge of any refusal of coverage or any notice that a defense will be afforded with reservation of
rights, or any notice of cancellation or any other indication that any insurance policy is no longer in full force or effect or
will not be renewed or that the issuer of any policy is not willing or able to perform its obligations thereunder.


 


(d)           
All premiums due, and all material obligations to be performed by the Company, under each policy to which it is a party
or that provides coverage to the Company or its business or any director or officer thereof, have been paid or performed.


 


3.18         
Environmental Matters.


 


(a)           
The Company is, and at all times has been, in compliance with, and has not been and is not in violation of or liable under,
any Environmental Law, except for such instances of non-compliance, violation, or liability that have not had or would not have,
individually or in the aggregate, a Material Adverse Effect on the Company.


 


(b)           
The Company does not have, nor to the Knowledge of the Company is it likely to have , nor has it received, any Order, written
notice, or other communication, or to the Knowledge of the Company, any Threatened Order, from (i) any Governmental Body or private
citizen acting in the public interest, or (ii) the current or prior owner or operator of any Facilities, of any actual or potential
violation or failure of the Company to comply with any Environmental Law, or of any actual or Threatened obligation on the Company
to undertake or bear the cost of any Environmental, Health, and Safety Liabilities with respect to any of the Facilities or any
other properties or assets (whether real, personal, or mixed) in which the Company has or had an interest, or with respect to any
property or Facility at which Hazardous Materials were or are used or stored by the Company, or from which Hazardous Materials
have been transported, treated, stored, handled, transferred, disposed, recycled, or received, in any such case that have had or
would have, individually or in the aggregate, a Material Adverse Effect on the Company.


 


(c)           
Neither the Company nor any Seller has permitted or conducted any Hazardous Activity with respect to the Facilities or any
other properties or assets (whether real, personal, or mixed) in which the Company has or had an interest except in compliance
in all material respects with all applicable Environmental Laws.


 


(d)           
To the Knowledge of the Company, there has been no Release or, to the Knowledge of the Company, threat of Release, of any
Hazardous Materials at or from the Facilities by the Company or at any other locations by the Company where any Hazardous Materials
were generated, manufactured, refined, transferred, produced, imported, used, or processed from or by the Facilities, or from or
by any other properties and assets (whether real, personal, or mixed) in which the Company has or had an interest, in any such
case that had or would have, individually or in the aggregate, a Material Adverse Effect on the Company.


 


 


 


 


 






    	 	28	 



     

    

 


(e)           
To the Knowledge of the Company, no reports, studies, analyses, tests, or monitoring pertaining to Hazardous Materials or
Hazardous Activities in, on or under the Facilities, or concerning compliance by the Company with Environmental Laws, exist.


 


3.19         
Employees.


 


(a)           
Section 3.19(a) of the Disclosure Schedules contains a complete and accurate list of the following information for
each current director, executive officer, and key employee (which includes retail location and district managers) of the Company
as of the date stated therein: name; job title; service date; status (active or leave of absence); current compensation paid or
payable and any change in compensation since the Interim Balance Sheet Date; accrued vacation and other accrued leave; if on leave,
start date, type of leave, anticipated return date; and if receiving continuation coverage pursuant to COBRA (the Consolidated
Omnibus Budget Reconciliation Act of 1986), termination date, last date for coverage, contribution responsibility (monthly premiums
by employee and employer).


 


(b)           
To the Knowledge of the Company, no director, officer, or key employee of the Company is a party to, or is otherwise bound
by, any Contract or arrangement, including any confidentiality, non-compete, or proprietary rights agreement, that in any way adversely
affects or will affect in any material respect (i) the performance of his or her duties or (ii) the ability of the Company to conduct
its business in the Ordinary Course of Business. No officer of the Company or other key employee of the Company has given notice
that he or she intends to terminate his or her officer position or employment.


 


3.20         
Labor Relations; Compliance. The Company is not a party to any collective bargaining agreement or any
other labor-related Contract with any labor union or labor organization. Except as set forth in Section 3.20(a) of the Disclosure
Schedules, there is not presently pending or existing, and, to the Knowledge of the Company, there is not Threatened, (i)
any strike, slowdown, picketing, work stoppage, or employee grievance process, (ii) any Proceeding or Order against or affecting
the Company relating to the alleged violation of any Legal Requirement pertaining to labor relations or employment matters, including
any charge or complaint with the National Labor Relations Board, the Equal Employment Opportunity Commission, or any comparable
Governmental Body, organizational activity, or other labor or employment dispute against or affecting the Company, or (iii) any
petition or application for certification of a collective bargaining agent. To the Knowledge of the Company, no event has occurred
or circumstance exists that could provide the basis for any work stoppage or other labor dispute by employees of the Company.
There is no lockout of any employees by the Company, and no such action is contemplated by the Company. The Company has not been
requested to engage in collective bargaining with any labor organization. The Company is not currently engaged in or obligated
to engage in collective bargaining with any labor organization. The Company has complied in all material respects with all Legal
Requirements and Contracts relating to employment, equal employment opportunity, nondiscrimination, immigration, wages, hours,
benefits, collective bargaining, the payment of social security, occupational safety and health, and plant closing or layoff of
employees. The Company is not liable for the payment of any compensation, damages, fines, penalties, or other amounts, however
designated, for failure to comply with any of the foregoing Legal Requirements, Orders, or Contracts.


 


 


 


 


 


 


 






    	 	29	 



     

    

 


3.21         
Intellectual Property.


 


(a)           
Section 3.21(a) of the Disclosure Schedules lists all (i) Company IP Registrations and (ii) Company Intellectual
Property, including software, that are not registered but that are material to the Company’s business or operations. All
required filings and fees related to the Company IP Registrations have been timely filed with and paid to the relevant Governmental
Bodies and authorized registrars, and all Company IP Registrations are otherwise in good standing.


 


(b)           
The Company is the sole and legal and beneficial, and with respect to the Company IP Registrations, record, owner of all
right, title, and interest in and to or lawful licensor of the Company Intellectual Property used in or necessary for the conduct
of the Company’s current business or operations, in each case, free and clear of Encumbrances. To the Knowledge of the Company,
it has the valid right to use all other Intellectual Property used in the Company’s current business or operations.


 


(c)           
The consummation of the Contemplated Transactions will not result in the loss or impairment of, or payment of any additional
amounts with respect to, nor require the consent of any other Person in respect of, the Company’s right to own, use, or hold
for use any Intellectual Property as owned, used, or held for use in the conduct of the Company’s business or operations
as currently conducted, except as would not have a Material Adverse Effect.


 


(d)           
The Company’s rights in the Company Intellectual Property are valid, subsisting, and enforceable. The Company has
taken reasonable steps to maintain the Company Intellectual Property that is owned by the Company and to protect and preserve the
confidentiality of all trade secrets included in the Company Intellectual Property that is owned by the Company.


 


(e)           
The conduct of the Company’s business as currently and formerly conducted, and the products, processes, and services
of the Company, have not infringed, misappropriated, diluted, or otherwise violated, and do not and will not infringe, dilute,
misappropriate, or otherwise violate the Intellectual Property or other rights of any Person, except as would not have a Material
Adverse Effect. To the Knowledge of the Company, no Person has infringed, misappropriated, diluted, or otherwise violated, or is
currently infringing, misappropriating, diluting, or otherwise violating, any Company Intellectual Property that is owned by the
Company.


 


(f)            
There are no Proceedings settled, pending, or, to the Knowledge of the Company, Threatened: (i) alleging any infringement,
misappropriation, dilution, or violation of the Intellectual Property of any Person by the Company; (ii) challenging the validity,
enforceability, registrability, or ownership of any Company Intellectual Property that is owned by the Company or the Company’s
rights with respect to any Company Intellectual Property; or (iii) by the Company or any other Person alleging any infringement,
misappropriation, dilution, or violation by any Person of the Company Intellectual Property. The Company is not subject to any
outstanding or, to the Knowledge of the Company, prospective Order that does or would restrict or impair the use of any Company
Intellectual Property.


 


 


 


 


 


 






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(g)           
For purposes of this Section 3.21(g): (i) “Privacy Statements” means, collectively, any and all
of the Company’s privacy policies published on the Websites or otherwise made available by the Company to third parties regarding
the collection, retention, use, and distribution of the Personally Identifiable Information of individuals, including from visitors
of any of the Websites (“Individuals”) and (ii) “Terms and Conditions” means any and all
of the visitor terms and conditions published on the Websites governing Individuals’ use of and access to the Websites.


 


(i)                
A Privacy Statement is posted on each Website. The Privacy Statements include, at a minimum, accurate notice to Individuals
about the Company’s collection, retention, use, and disclosure policies and practices with respect to Personally Identifiable
Information obtained through the Website. The Privacy Statements are accurate and consistent with the Terms and Conditions and
the Company’s actual practices with respect to the collection, retention, use, and disclosure of Personally Identifiable
Information obtained through the Website. The Company materially complies with the Privacy Statements as applicable to any given
set of Personally Identifiable Information collected by the Company from Individuals through the Website that is applicable to
the business of the Company.


 


(ii)             
The Company does not knowingly collect information from or target children under 13 years of age in its Website content.
The Company does not sell, rent, or otherwise make available to third parties any Personally Identifiable Information submitted
by Individuals except as is customary within the Company’s industry (including with respect to credit and payment programs
with which customers of the Company participate) and in compliance with applicable Legal Requirements.


 


(iii)           
The Terms and Conditions are posted on the Websites. No claims or controversies have arisen regarding the Terms and
Conditions.


 


3.22         
Certain Payments. Neither the Company nor any Seller, or any director or officer of the Company, or,
to the Knowledge of the Company, any agent, employee, or other Person associated with or acting for or on behalf of the Company,
has directly or indirectly in contravention with a Legal Requirement, (i) made any contribution, gift, bribe, rebate, payoff,
influence payment, kickback, or other payment to any Person, private or public, regardless of form, whether in money, property,
or services (A) to obtain favorable treatment in securing business for the Company, (B) to pay for favorable treatment for business
secured for the Company, (C) to obtain special concessions or for special concessions already obtained, for or in respect of the
Company, or (D) established or maintained any fund or asset of the Company that has not been recorded in the books and records
of the Company.


 


3.23         
Suppliers. Section 3.23 of the Disclosure Schedules sets forth a complete and accurate list of
the ten (10) largest suppliers of materials, products, or services to the Company (measured by the aggregate amount purchased
by the Company) during the fiscal year ended December 31, 2015 and the six (6) months ended June 30, 2016, respectively. To the
Knowledge of the Company, the relationships of the Company with the Company’s suppliers are good commercial working relationships,
the Company is not engaged in any dispute with any supplier of the Company, and none of those suppliers has canceled or otherwise
terminated, or, to the Knowledge of the Company, Threatened to cancel or otherwise terminate, its relationship with the Company
or has during the twelve (12) months ended December 31, 2016 materially decreased or Threatened to decrease or limit its services,
supplies, or materials provided to the Company, which dispute, cancellation, termination, or decrease, individually or in the
aggregate, has resulted in or would reasonably be expected to result in, a Material Adverse Effect. To the Knowledge of the Company,
no supplier of the Company has notified the Company of its intention to cancel or otherwise modify its relationship with the Company,
or to decrease materially or limit its services, supplies, or materials provided to the Company, which modification, cancellation,
or other action as aforesaid would have, individually or in the aggregate, a Material Adverse Effect.


 


 


 


 


 


 






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3.24         
Relationships with Affiliates. Except as set forth in Section 3.24 of the Disclosure Schedules,
no Seller nor any Affiliate of any Seller or the Company is a party to any Contract with, or has any legal claim against, the
Company. Except as set forth in Section 3.24 of the Disclosure Schedules, no Seller nor any Affiliate of any Seller or
the Company has, or has had, any interest in any property (whether real, personal, or mixed and whether tangible or intangible)
used in or pertaining to the Company’s business. Except as set forth in Section 3.24 of the Disclosure Schedules,
no Seller nor any Affiliate of any Seller or the Company owns or has owned (of record or as a beneficial owner) an equity interest
or any other financial or profit interest in, a Person that has (i) had material business dealings or a material financial interest
in any transaction with the Company or the Company’s business, other than business dealings or transactions conducted in
the Ordinary Course of Business at substantially prevailing market prices and on substantially prevailing market terms or (ii)
engaged in competition with the Company’s business.


 


3.25         
Brokers or Finders. Neither the Company nor any Seller has incurred any obligation or liability, contingent
or otherwise, for brokerage or finders’ fees or agents’ commissions, fairness opinion, or other similar payment in
connection with this Agreement.


 


3.26         
Indebtedness; Tangible Shareholders’ Equity.


 


(a)           
Section 3.26(a) of the Disclosure Schedules sets forth a true and complete list as of the date of this Agreement
of all Indebtedness of the Company and provides (i) the names of the original lender and current holder (to the extent that the
Company has received a written notice of the assignment thereof) and (ii) outstanding principal balances and all accrued and unpaid
interest as of the date hereof. Immediately prior to the Closing, there will be no outstanding Indebtedness (including any pre-payment
fees, exit fees, rescheduling fees, or penalties) of the Company arising from obligations created by or on behalf of the Company
or any Seller prior to the Closing other than the Closing Term Loan Payment Amount and the Closing Date Revolving Loan Amount.


(b)           
The Closing Date Balance Sheet will show that the Company has at least $20,000,000 in Tangible Shareholders’ Equity.


 


3.27         
Loans with Sellers, Executives, and Directors. There are no outstanding loans, guaranties, or extensions
of credit (i) by the Company to or for any Seller or any director or executive officer (or equivalent thereof) of the Company
and (ii) by any Seller or any director or executive officer (or equivalent thereof) of the Company to or for the Company.


 


 


 


 


 


 






    	 	32	 



     

    

 


3.28         
Bank Accounts. Section 3.28 of the Disclosure Schedules sets forth the account number and names
of authorized signatories with respect to each account maintained by or for the benefit of the Company at any bank or other financial
institution.


 


3.29         
Unclaimed or Abandoned Property; Escheat. Except with respect to the items set forth on and as set forth
on Section 3.29 of the Disclosure Schedules, the Company is in compliance in all material respects with applicable Legal
Requirements dealing with abandoned or unclaimed property or escheat. Except with respect to the items set forth on and as set
forth on Section 3.29 of the Disclosure Schedules, the Company has reported and remitted to each Governmental Body as and
to the extent required by applicable Legal Requirements all amounts held, due, or owing by the Company in the course of the operations
of the business of the Company and remaining unclaimed or unpaid for a period of time such that they are presumed abandoned under
applicable Legal Requirements as reflected on the books and records of the Company. Except with respect to the items set forth
on and as set forth on Section 3.29 of the Disclosure Schedules, no amounts that are, or would be, or would become, unclaimed
property or presumed abandoned under applicable Legal Requirements dealing with abandoned or unclaimed property or escheat have
been written off, written, or reversed to income, or otherwise removed or excluded from the liabilities set forth on the Interim
Balance Sheet or the Financial Statements (or will be written off, written, or reversed to income, or otherwise removed or excluded
from the liabilities forth on the Closing Date Balance Sheet).


 


3.30         
No Other Representations and Warranties. Except for the representations and warranties contained in this
Article 3, none of the Sellers or the Company has made or makes any other express or implied representation or warranty
to the Buyer, either written or oral, on behalf of the Sellers and the Company, including any representation or warranty as to
the accuracy or completeness of any information regarding the business of the Company or the Shares. 


 


ARTICLE
4

REPRESENTATIONS AND WARRANTIES OF THE BUYER


 


The Buyer represents
and warrants to the Sellers as follows:


 


4.1             
Organization and Good Standing. The Buyer is a limited liability company duly organized, validly existing,
and in good standing under the laws of the State of Nevada and the Buyer has all requisite limited liability company authority
and power to carry on its business as now conducted.


 


4.2             
Authority; No Conflict.


 


(a)           
The Buyer has all necessary limited liability company power and authority to enter into this Agreement, to carry out its
obligations hereunder and to consummate the transactions contemplated hereby. The execution and delivery by the Buyer of this Agreement,
the performance by the Buyer of its obligations hereunder and the consummation by the Buyer of the Contemplated Transactions have
been duly authorized by all requisite limited liability company action on the part of the Buyer. This Agreement has been duly executed
and delivered by the Buyer and constitutes the legal, valid, and binding obligation of the Buyer, enforceable against the Buyer
in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization,
or similar laws relating to creditors’ rights generally and by equitable principles. Upon the execution and delivery by the
Buyer of the other Transaction Documents to which it is a party, such Transaction Documents will constitute the legal, valid, and
binding obligations of the Buyer, enforceable against the Buyer in accordance with their respective terms, except as enforcement
may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization, or similar laws relating to creditors’ rights
generally and by equitable principles. The Buyer has the limited liability company power and authority to execute and deliver this
Agreement and the Transaction Documents to which it is a party and to perform its obligations hereunder and thereunder.


 


 


 






    	 	33	 



     

    

 


(b)           
Neither the execution and delivery of this Agreement by the Buyer nor the consummation or performance of any of the Contemplated
Transactions by the Buyer will conflict with or give any Person the right to prevent, delay, or otherwise interfere with any of
the Contemplated Transactions pursuant to:


 


(i)                
any provision of the Buyer’s Organizational Documents;


 


(ii)             
any resolution adopted by the Board of Directors or the sole member of the Buyer;


 


(iii)           
any Legal Requirement to which the Buyer may be subject; or


 


(iv)            
any Contract to which the Buyer is a party or by which the Buyer may be bound.


The Buyer is not, and will not be, required
to obtain any Consent from any Person or Governmental Body in connection with the execution and delivery of this Agreement or the
consummation or performance of any of the Contemplated Transactions.


 


4.3             
Investment Intent. The Buyer is acquiring the Shares solely for its own account for investment purposes
and not with a view to, or for offer or sale in connection with, any distribution thereof. The Buyer acknowledges that the Shares
are not registered under the Securities Act or any state securities laws and that the Shares may not be transferred or sold except
pursuant to the registration provisions of the Securities Act or pursuant to an applicable exemption therefrom and subject to
state securities laws and regulations, as applicable.


 


4.4             
Certain Proceedings.  There is no pending Proceeding that has been commenced against the Buyer and that
challenges, or would have the effect of preventing, delaying, making illegal, or otherwise interfering with, any of the Contemplated
Transactions. To the Knowledge of the Buyer, no such Proceeding has been Threatened.


 


4.5             
Brokers or Finders. Buyer has incurred no obligation or liability, contingent or otherwise, for brokerage
or finders’ fees or agents’ commissions or other similar payment in connection with this Agreement.


 


4.6             
[Intentionally Omitted].


 


4.7             
Sufficiency of Funds. Subject to obtaining the Financing, the Buyer will have sufficient cash on hand
or other sources of immediately available funds to enable it to make payment of the Purchase Price to the Sellers and to consummate
the Contemplated Transactions. Immediately after giving effect to the transactions contemplated hereby and the Financing and assuming
the truth and accuracy in all respects of the representations and warranties made by the Company and the Sellers in Sections
3.3, 3.4, 3.10, and 3.26, the Buyer shall: (a) be able to pay its debts in the ordinary course as they
become due, including the Promissory Note; (b) own property that has a fair saleable value greater than the amounts required to
pay its debts, including the Promissory Note; and (c) have adequate capital to carry on its business. In connection with the transactions
contemplated hereby and assuming the truth and accuracy in all respects of the representations and warranties made by the Company
and the Sellers in Sections 3.3, 3.4, 3.10, and 3.26, the Buyer has not incurred debts beyond its
ability to pay as they become absolute and matured.


 


 


 


 






    	 	34	 



     

    

 


4.8             
Independent Investigation. The Buyer has conducted its own independent investigation, review and analysis
of the business of the Company, and acknowledges that it has been provided adequate access to the personnel, properties, assets,
premises, books and records, and other documents and data of the Company for such purpose. The Buyer acknowledges and agrees that:
(a) in making its decision to enter into this Agreement and to consummate the Contemplated Transactions, the Buyer has relied
solely upon its own investigation and the express representations and warranties of the Company and Sellers set forth in Article
3 of this Agreement; and (b) neither the Sellers, the Company, nor any of their Affiliates or Representatives have made any
representation or warranty as to the Sellers, the Company, the Shares, and the business of the Company and its assets, except
as expressly set forth in Article 3 of this Agreement and as may be set forth in the agreements and instruments entered
into or delivered in connection with the Financing.


 


ARTICLE
5

COVENANTS OF THE COMPANY AND THE SELLERS PRIOR TO THE CLOSING


 


5.1             
Access and Investigation; Financial Statements. Subject to the terms of the Nondisclosure Agreement,
from the date hereof through the earlier of the Closing or the termination of this Agreement pursuant to Section 10.1,
the Company and the Sellers shall provide the Buyer and its Affiliates, Representatives, and prospective sources of the Financing
access to, and the opportunity to make such investigation of, the properties, businesses, operations, customers, suppliers, and
employees of the Company, and such examination of the books, records, and financial condition of the Company, as the Buyer or
its Affiliates, Representatives, or prospective sources of the Financing may reasonably request. As interim monthly financial
statements for the Company are published, those statements shall be delivered to the Buyer.


 


5.2             
Operation of the Business of the Company. Between the date of this Agreement and the earlier of the Closing
or the termination of this Agreement pursuant to Section 10.1, the Company and the Sellers shall:


 


(i)                
conduct the business of the Company only in the Ordinary Course of Business, except with respect to the Hastings
Project;


 


 


 


 


 






    	 	35	 



     

    

 


(ii)             
use their reasonable best efforts to preserve intact the Company’s current business organization, keep available
the services of its current officers, employees, and agents, and maintain the relations and goodwill with suppliers, customers,
landlords, creditors, employees, agents, Affiliates, and others having business relationships with it;


 


(iii)           
confer with the Buyer concerning operational matters of a material nature outside of the Ordinary Course of Business;
and


 


(iv)            
otherwise report periodically to the Buyer, at the Buyer’s reasonable request, concerning the status of its
business, operations, finances, business organization, and employee and other service provider staffing.


 


5.3             
Negative Covenant; Cash Distributions. 


 


(a)           
Except as otherwise expressly permitted by this Agreement, between the date of this Agreement and the earlier of the Closing
or the termination of this Agreement pursuant to Section 10.1, neither the Company nor any Seller shall, without the Buyer’s
prior written consent (not to be unreasonably withheld, delayed, denied, or conditioned), take any affirmative action, or fail
to take any reasonable action within its or his control, as a result of which any of the changes or events listed in Section
3.15 is likely to occur.


 


(b)           
Between the date of this Agreement and the earlier of the Closing or the termination of this Agreement pursuant to Section
10.1, the Company may make cash distributions to the Sellers in the Ordinary Course of Business; provided, however,
that such cash distributions shall not exceed (i) $400,000 in the aggregate, per month, during the period from and after the date
of this Agreement through the Closing, plus (ii) the amount of cash distributions to the Sellers in an aggregate amount necessary
for the sole purpose of funding the 2015 and 2016 estimated and actual income Tax liabilities of the Sellers in respect of their
income of the Company, including income Tax payments required to be paid by the Sellers pursuant to Section 7.1 (exclusive
of any indemnification payment obligations of the Sellers contained within Section 7.1(e)); provided, further, that
in no event shall the cash distributions specified in clauses (i) and (ii) immediately above cause the Tangible Shareholders’
Equity to be less than $20,000,000 immediately prior to the Closing as shown on the Closing Date Balance Sheet.


 


5.4             
Notification. Between the date of this Agreement and the earlier of the Closing or the termination of
this Agreement pursuant to Section 10.1, the Sellers shall promptly notify the Buyer in writing if any Seller or the Company
becomes aware of any fact or condition that causes or constitutes an inaccuracy or a breach of any of the Company’s and/or
the Sellers’ representations and warranties as of the date of this Agreement, or if any Seller or the Company becomes aware
of the occurrence after the date of this Agreement of any fact or condition that would (except as expressly contemplated by this
Agreement) cause or constitute an inaccuracy or a breach of any such representation or warranty had such representation or warranty
been made as of the time of occurrence or discovery of such fact or condition. During the same period, the Sellers shall promptly
notify Buyer of the occurrence of any breach of any covenant of the Sellers or the Company in this Article 5 or of the
occurrence of any event that would reasonably be expected to make the satisfaction of the conditions in Article 8 impossible
or unlikely; provided, however, that for purposes of determining (i) the satisfaction of the conditions in Sections
8.1 and 8.2 or (ii) the existence of an inaccuracy or a breach of any representation or warranty made on the date of
this Agreement or on the Closing Date or the occurrence of a breach of any covenant or obligation of the Sellers or the Company,
including for purposes of Article 11 and the rights to indemnification set forth therein, any information provided to the
Buyer pursuant to this Section 5.4 or pursuant to any other provision of this Agreement after the date hereof will
be disregarded and have no effect.


 


 


 


 


 






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5.5             
Payment of Indebtedness; Tangible Shareholders’ Equity. 


 


(a)           
The Sellers and the Company will cause all Indebtedness owed by the Company to any Person to be paid in full prior to the
Closing other than the Closing Term Loan Payment Amount and the Closing Date Revolving Loan Amount.


 


(b)           
The Sellers and the Company will cause all Indebtedness owed to the Company by any Seller or any Affiliate of any Seller
or the Company to be paid in full at or prior to Closing.


 


(c)           
The Sellers and the Company shall not take any affirmative action, or fail to take any action within its or his control,
as a result of which the Company shall have less than $20,000,000 in Tangible Shareholders’ Equity on the Closing Date Balance
Sheet.


 


5.6             
Claims. Prior to the Closing, the Company shall notify the Buyer in writing of all known facts, events,
and circumstances within the Knowledge of the Company that could reasonably be expected to give rise to a claim or Proceeding
against the Company and whether such claim or Proceeding is covered by insurance.


 


5.7             
Reasonable Best Efforts. Between the date of this Agreement and the earlier of the Closing or the termination
of this Agreement pursuant to Section 10.1, the Sellers and the Company shall use their reasonable best efforts to cause
the conditions in Article 8 to be satisfied.


 


5.8             
No Solicitation of Other Bids. 


 


(a)           
Between the date of this Agreement and the earlier of the Closing or the termination of this Agreement pursuant to Section
10.1, none of the Sellers or the Company shall, nor shall any of the Sellers or the Company authorize or permit any of their
respective Affiliates or Representatives to, directly or indirectly, (i) encourage, solicit, initiate, facilitate, or continue
inquiries regarding an Acquisition Proposal; (ii) enter into discussions or negotiations with, or provide any information to, any
Person concerning a possible Acquisition Proposal; or (iii) enter into any agreements or other instruments (whether or not binding)
regarding an Acquisition Proposal. Each Seller and the Company shall immediately cease and cause to be terminated, and shall cause
its or his Affiliates and all of their respective Representatives to immediately cease and cause to be terminated, all existing
discussions or negotiations with any Persons conducted heretofore with respect to, or that could lead to, an Acquisition Proposal.
For purposes hereof, “Acquisition Proposal” shall mean any inquiry, proposal, or offer from any Person (other
than the Buyer or any of its Affiliates) concerning (A) a merger, consolidation, liquidation, recapitalization, share exchange,
or other business combination transaction involving the Company; (B) the issuance or acquisition of shares of capital stock or
other equity securities of the Company; or (C) the sale, lease, exchange, or other disposition of substantially all of the Company’s
properties or assets.


 


 


 


 






    	 	37	 



     

    

 


(b)           
In addition to the other obligations under this Section 5.8, within three Business Days after receipt thereof by
any Seller, the Company, or any of their respective Representatives, such Seller or the Company, as applicable, shall advise the
Buyer orally and in writing of any Acquisition Proposal, any request for information with respect to any Acquisition Proposal,
or any inquiry with respect to or which could reasonably be expected to result in an Acquisition Proposal, the material terms and
conditions of such request, Acquisition Proposal, or inquiry, and the identity of the Person making the same.


 


(c)           
The Sellers and the Company agree that the rights and remedies for noncompliance with this Section 5.8 shall include
having such provision specifically enforced by any court having equity jurisdiction, it being acknowledged and agreed that any
such breach or threatened breach shall cause irreparable injury to the Buyer, that money damages would not provide an adequate
remedy to the Buyer, and that the Buyer shall not be required to post bond or other security in any such enforcement action.


 


5.9             
Financing. Between the date of this Agreement and the earlier of the Closing or the termination of this
Agreement pursuant to Section 10.1, the Company and the Sellers shall cooperate and take all actions reasonably requested
by the Buyer or its Affiliates in connection with the Buyer obtaining the Financing.


 


ARTICLE
6

COVENANTS OF THE BUYER


 


6.1             
Reasonable Best Efforts. Between the date of this Agreement and the earlier of the Closing or the termination
of this Agreement pursuant to Section 10.1, the Buyer shall use its reasonable best efforts to cause the conditions in
Article 9 to be satisfied.


 


6.2             
Financing. The Buyer shall use its reasonable best efforts, at its cost and expense, to obtain the financing
needed by the Closing Date in order to consummate the Contemplated Transactions and operate the business of the Company following
the Closing (the “Financing”), on terms satisfactory to the Buyer and its Affiliates.


 


6.3             
Access. From and after the Closing until the date of maturity of the Promissory Note, the Buyer shall,
and shall cause the Company to, furnish the Sellers and their Representatives, within a reasonable time of request, with access
to such financial, operating, and other data and information of the Company as the Sellers may reasonably request; provided,
that any such information shall (a) be provided only during normal business hours under the supervision of the Buyer’s personnel
in such manner as to not interfere with the normal operations of the Company and (b) shall be deemed to be Confidential Information
and be subject to Section 7.5.


 


 


 


 


 






    	 	38	 



     

    

 


ARTICLE
7

ADDITIONAL AGREEMENTS


7.1             
Certain Tax Covenants.


 


(a)           
Without the prior written consent of the Buyer, no Seller (and, prior to the Closing, none of the Company, its Affiliates,
and their respective Representatives) shall, to the extent it may affect, or relate to, the Company, make, change, or rescind any
Tax election, amend any Tax Return, take any position on any Tax Return, take any action, omit to take any action, or enter into
any other transaction, that would have the effect of increasing the Tax liability or reducing any Tax asset of the Buyer or the
Company in respect of any Post-Closing Tax Period.


 


(b)           
All transfer, documentary, sales, use, stamp, registration, value added, and other such Taxes and fees (including any penalties
and interest) incurred in connection with this Agreement shall be borne and paid 50% by the Sellers and 50% by the Buyer, when
due. Each party shall, at his or its own expense, timely file any Tax Return or other document with respect to such Taxes or fees
(and the other party shall cooperate with respect thereto as necessary).


 


(c)           
The Sellers shall prepare and file, or cause to be prepared and filed, when due all Tax Returns for the Company for all
Pre-Closing Tax Periods ending on or prior to the Closing Date that are required to be filed after the Closing Date. The Sellers
shall include any income, gain, loss, deduction, or other tax items for such periods on their Tax Returns in a manner consistent
with the Schedule K-1s prepared by the Sellers for such periods. The Sellers shall permit the Buyer or its Representatives to review
and comment on each such Tax Return filed after the date of this Agreement, prior to filing. The Buyer shall prepare and file,
or cause to be prepared and filed, all Tax Returns for the Company for the periods ending after the Closing Date.


 


(d)           
In the case of Taxes that are payable with respect to a taxable period that begins before and ends after the Closing Date
(each such period, a “Straddle Period”), the portion of any such Taxes that are treated as Pre-Closing Taxes
for purposes of this Agreement shall be:


 


(i)                
in the case of Taxes (A) based upon, or related to, income, receipts, profits, wages, capital, or net worth, (B)
imposed in connection with the sale, transfer, or assignment of property, or (C) required to be withheld, deemed equal to the amount
that would be payable if the taxable year ended with the Closing Date; and


 


(ii)             
in the case of other Taxes, deemed to be the amount of such Taxes for the entire period multiplied by a fraction
the numerator of which is the number of days in the period ending on the Closing Date and the denominator of which is the number
of days in the entire period.


 


 


 


 






    	 	39	 



     

    

 


(e)           
The Sellers shall indemnify the Buyer Indemnified Parties and hold them harmless from and against (A) any Loss attributable
to any breach of or inaccuracy in any representation or warranty made in Section 3.11; (B) any Loss attributable to any
breach or violation of, or failure to fully perform, any covenant, agreement, undertaking, or obligation in this Section 7.1
or in Section 7.2 by any Seller; (C) all Taxes of the Company relating to the business of the Company for all Pre-Closing
Tax Periods (including all Taxes of the Company in respect of the matters set forth in Section 3.11(c) of the Disclosure Schedules);
(D) any and all Taxes of any Person imposed on the Company arising under the principles of transferee or successor liability or
by Contract, relating to an event or transaction occurring before the Closing; in each of the above cases, together with any out-of-pocket
fees and expenses (including attorneys’ and accountants’ fees) incurred in connection therewith. The Sellers shall
reimburse the Buyer for any Taxes of the Company that are the responsibility of the Sellers pursuant to this Section 7.1
within fifteen (15) days after payment of such Taxes by the Buyer or the Company. Any indemnification payments pursuant to this
Section 7.1 shall be treated as an adjustment to the Purchase Price by the parties for Tax purposes, unless otherwise required
by Legal Requirement. Notwithstanding anything in this Agreement to the contrary, the provisions of Section 3.11 and this
Section 7.1 shall survive for the full period of all applicable statutes of limitations (giving effect to any waiver, mitigation,
or extension thereof) plus 60 days; provided, that, under no circumstance shall any claim arising under this Agreement be
brought by Buyer or a Buyer Indemnified Party later than 7 years from the Closing. To the extent that any obligation or responsibility
pursuant to Article 11 may overlap with an obligation or responsibility pursuant to this Section 7.1, the provisions
of this Section 7.1 shall govern.


 


(i)                
The Sellers shall not be liable to the Buyer or Buyer Indemnified Parties for indemnification under Section 7.1(e)(A)
until the aggregate amount of all Losses in respect of indemnification under Section 7.1(e)(A) exceeds $560,000, in which
event the Sellers shall be required to pay or be liable for Losses from the first dollar. Notwithstanding anything to the contrary
herein, the aggregate amount of all Losses for which the Sellers shall be liable pursuant to Section 7.1(e)(A) or Section
7.2 shall not exceed (A) $14,000,000 with respect to any Losses arising from the Sellers’ breach of Section 3.11(a)
or Section 7.2, and (B) $5,600,000, with respect to all other Losses arising pursuant to Section 7.1(e)(A).


 


(ii)             
The Buyer Indemnified Parties shall take all reasonable steps to mitigate any Loss upon becoming aware of any event
or circumstance that would reasonably be expected to, or does, give rise thereto, including incurring costs only to the minimum
extent necessary to remedy the breach that gave rise to such Loss.


 


(f)            
The Buyer agrees to give prompt written notice to the Sellers’ Representative (which, in any event, shall be within
30 days) of the receipt of any written notice of any Governmental Authority by the Company, the Buyer, or any of the Buyer’s
Affiliates that involves the assertion of any claim, or the commencement of any Proceeding, in respect of which an indemnity may
be sought by the Buyer pursuant to this Section 7.1 (a “Tax Claim”); provided, that failure to
comply with this provision shall not affect the Buyer’s right to indemnification hereunder.


 


(g)           
Buyer’s Control of Tax Claims. Subject to Section 7.1(h), the Buyer shall control the contest or resolution
of any Tax Claim; provided, however, that the Buyer shall obtain the prior written consent of the Sellers’ Representative
(which consent shall not be unreasonably withheld, delayed, denied, or conditioned) before entering into any settlement of a claim
or ceasing to defend such claim; and, provided, further, that the Sellers’ Representative shall be entitled to participate
in the defense of such claim and to employ counsel of his choice for such purpose, the fees and expenses of which separate counsel
shall be borne solely by the Sellers. The Buyer shall pursue any such Tax Claim in a timely manner and in good faith.


 


 


 


 






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(h)           
Seller’s Control of Tax Claims. If, within 15 days after the Buyer has provided notice to the Sellers’
Representative pursuant to Section 7.1(f), the Sellers’ Representative provides notice to the Buyer that the Sellers
propose to undertake the defense of the Tax Claim, the Sellers shall have the right to undertake and control the Tax Claim proceedings
using counsel of their own choice and their sole expense; provided, that, (i) the Tax Claim involves only money damages
and does not seek an injunction or other equitable relief against the Buyer or any of its Affiliates; (ii) in the opinion of counsel
to the Buyer there does not exist a non-waivable conflict of interest between the Sellers and the Buyer or any of its Affiliates
with respect to the Tax Claim; (iii) the Buyer does not in good faith determine that the Tax Claim proceedings are likely to materially
and adversely affect its reputation or the reputation of any of its or any of its Affiliate’s brands; and (iv) the Buyer
shall be entitled to participate in the defense of such claim and to employ counsel of its choice for such purpose, the fees and
expenses of which separate counsel shall be borne solely by the Buyer. The Sellers shall not cease to defend, settle or otherwise
dispose of the Tax Claim without the consent of the Buyer, which consent is not to be unreasonably withheld, denied, or delayed.


 


(i)             
The Sellers and the Buyer shall provide each other with such cooperation and information as either of them reasonably may
request of the other in filing any Tax Return pursuant to this Section 7.1 or in connection with any audit or other proceeding
(including all Tax Claims) in respect of Taxes of the Company. Such cooperation and information shall include providing copies
of relevant Tax Returns or portions thereof, together with accompanying schedules, related work papers, and documents relating
to rulings or other determinations by tax authorities. Each of the Sellers and the Buyer shall retain all Tax Returns, schedules
and work papers, records, and other documents in their respective possession relating to Tax matters of the Company for any taxable
period beginning before the Closing Date until the expiration of the statute of limitations of the taxable periods to which such
Tax Returns and other documents relate, without regard to extensions except to the extent notified by the other party in writing
of such extensions for the respective Tax periods.


 


7.2             
Section 338(h)(10) Election. The Sellers shall join with the Buyer in making a timely election under
IRC §338(h)(10) (and any corresponding election under state and local Legal Requirements) with respect to the purchase and
sale of the Shares hereunder (collectively, a “Section 338(h)(10) Election”). The Buyer and the Sellers shall
report the Contemplated Transactions in a manner consistent with the Section 338(h)(10) Election. Neither the Buyer nor any Seller
shall take any action that is inconsistent with the Section 338(h)(10) Election or its validity under the IRC and the applicable
Treasury Regulations. Within ninety (90) days after the Closing Date, the Buyer shall deliver to the Sellers’ Representative
an allocation schedule (the “Allocation Schedule”) setting forth the Buyer’s good faith calculation of
the aggregate deemed sales price, the adjusted grossed-up basis, and the allocation of the aggregate deemed sales price and adjusted
grossed-up basis among the assets of the Company in accordance with the principles of Treasury Regulations §1.338-6, taking
into due consideration the suggested allocations set forth in the allocation schedule in Section 7.2 of the Disclosure Schedules.
If, within fifteen (15) days after his receipt of the Allocation Schedule, the Sellers’ Representative notifies the Buyer
in writing that the Sellers object to one or more items reflected in the Allocation Schedule (indicating each disputed item and
the basis for their objection thereto), the Sellers’ Representative and the Buyer shall negotiate in good faith to resolve
such dispute; provided, however, that, if the Sellers’ Representative and the Buyer are unable to resolve any dispute
with respect to the Allocation Schedule within thirty (30) days following the Buyer’s receipt of the Sellers’ Representative’s
objection notice, such dispute shall be resolved by a nationally recognized accounting firm jointly selected by the Buyer the
Sellers’ Representative within five (5) Business Days after the expiration of such 30-day period (or if the parties are
unable to agree upon a nationally recognized accounting firm, each party shall select a nationally recognized accounting firm
and the two firms together shall select a third a nationally recognized accounting firm) (the “Accounting Referee”).
The Accounting Referee shall make a determination as soon as practicable within 30 days (or such other time as the Buyer and the
Sellers’ Representative shall agree in writing) after their engagement, and their resolution of the disputed items shall
be conclusive and binding upon the parties hereto. The fees and expenses of such Accounting Referee shall be allocated between
the Sellers and the Buyer based on their relative success with respect to the disputed items (as finally determined by the Accounting
Referee). For example, if the Sellers’ Representative challenges the calculation of an amount of $100,000, but the Accounting
Referee determines that the Sellers’ Representative has a valid claim for only $40,000, the Buyer shall bear forty percent
(40%) of the fees and expenses of the Accounting Referee and the Sellers shall bear the other sixty percent (60%) of such fees
and expenses. If the Sellers’ Representative fails to deliver a dispute notice within the aforementioned 15-day period,
then the Buyer’s Allocation Schedule shall be final and binding on the parties hereto. The Buyer shall prepare and file
Forms 8023 and 8883 and such other documents required in connection with the Section 338(h)(10) Election. The Sellers, the Company,
and the Buyer shall cooperate fully with each other and make available to each other such Tax data and other information as may
be reasonably required by the Sellers or the Buyer in order for the Sellers and the Buyer to timely file the Section 338(h)(10)
Election and any other required statements or schedules (or any amendments or supplements thereto) and compute the aggregate deemed
sale price and the adjusted grossed-up basis in accordance with the Treasury Regulations. Any adjustment to the Purchase Price
herein shall be allocated in a manner consistent with the Allocation Schedule.


 


 


 


 






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7.3             
Consents. Each party shall use reasonable best
efforts (which shall not require any payment to any third party) to obtain all Consents (including the Consents listed or required
to be listed in Section 3.2(b) of the Disclosure Schedule) that may be or become necessary for the performance of its obligations
under this Agreement or that are otherwise required in connection with the consummation of the Contemplated Transactions. For
the purposes of this Agreement, the “Required Consents” shall mean all Consents listed or required to be listed
in Section 3.2(b) of the Disclosure Schedule.


 


7.4             
Release by the Sellers. Each of the Sellers hereby releases and forever discharges the Buyer, the Company,
and each of their respective Affiliates, successors, and assigns from any and all claims, causes of action, and liabilities whatsoever,
whether known or unknown, suspected or unsuspected, both at law and in equity, that such Seller now has, has ever had, or may
hereafter have, against the Company arising contemporaneously with or prior to the Closing on account of such Seller’s employment
as an employee with the Company, including actions under any Legal Requirements relating to discrimination, sexual harassment,
wrongful discharge, or breach or interference with employment contract rights arising prior to the Closing Date; provided,
however, that nothing contained in this Section 7.4 will operate to release any obligations of the Buyer or the
Company (i) arising under this Agreement or the Contemplated Transactions or (ii) with respect to current claims for salaries,
wages, or benefits accrued for the current pay period but not paid; and provided, further, that no such unreleased
claim shall limit the Buyer’s rights to an indemnifiable claim under Article 11 with respect to matters arising out
of such claim. Each of the Sellers hereby irrevocably covenants to refrain from asserting any claim or demand, or commencing or
instituting any Proceeding, of any kind against the Company, the Buyer, or any of their respective Affiliates based upon any matter
released by this Section 7.4. Notwithstanding the foregoing or any other provision in this Agreement to the contrary, the
Buyer shall cause the Company to maintain its existing indemnification provisions as of the date hereof with respect to present
and former directors, officers, employees, and agents of the Company for all expenses, judgments, fines, and amounts paid in settlement
by reason of actions or omissions or alleged actions or omissions occurring at or before the Closing to the fullest extent permitted
or required under applicable law and the Company’s articles of incorporation and bylaws in effect as of the date of this
Agreement (to the extent consistent with applicable law), for a period of six years after the Closing, and shall cause the Company
to perform its obligations under such indemnification provisions in accordance with their respective terms.


 


 


 


 


 


 


 






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7.5             
Confidentiality. From and after the Closing, the Sellers shall hold, and shall use their respective reasonable
best efforts to cause their respective Representatives to hold, in confidence any and all Confidential Information, whether written
or oral, concerning the Company, except to the extent that the Seller can show that such information (i) is generally available
to and known by the public through no fault of any Seller or any Representative thereof; (ii) is required to be disclosed in connection
with the performance of a Seller’s duties as an employee of the Company; or (iii) is lawfully acquired by such Seller or
any of its Representatives from and after the Closing from sources that are not prohibited from disclosing such information by
a legal, contractual, or fiduciary obligation. If any Seller or any Representative thereof is compelled to disclose any information
by judicial or administrative process or by other Legal Requirements, such Seller shall promptly notify the Buyer in writing and
shall disclose only that portion of such information that such Seller is advised by its or his counsel in writing is legally required
to be disclosed, provided that such Seller shall use reasonable best efforts to obtain an appropriate protective order
or other reasonable assurance that confidential treatment will be accorded such information. The Nondisclosure Agreement shall
be deemed terminated effective upon the Closing. For the purposes of this Agreement, “Confidential Information”
shall mean the trade secrets, financial information, technical information, and business information of the Company that Company
management treated as confidential prior to the Closing Date or that a reasonable person would deem to be confidential based on
the type of information and method of disclosure.


 


7.6             
Non-competition; Non-solicitation. 


 


(a)           
For a period of five (5) years commencing on the Closing Date (the “Restricted Period”), none of the
Sellers shall, nor shall any Seller permit any of his or its Affiliates, directly or indirectly, to (i) engage in or assist others
in engaging in the Restricted Business in the Territory; (ii) have an interest in any Person that engages directly or indirectly
in the Restricted Business in the Territory in any capacity, including as a partner, shareholder, member, employee, principal,
agent, trustee, or consultant; or (iii) intentionally interfere in any material respect with the business relationships (whether
formed prior to or after the date of this Agreement) between the Company and customers or suppliers of the Company for the purpose
of diverting business away from the Company. Notwithstanding the foregoing, a Seller may own, directly or indirectly, solely as
an investment, securities of any Person traded on any national securities exchange if Seller is not a controlling Person of, or
a member of a group which controls, such Person and does not, directly or indirectly, own 5% or more of any class of securities
of such Person.


 


 


 


 


 


 


 


 


 






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(b)           
During the Restricted Period, none of the Sellers shall, nor shall any Seller permit any of his or its Affiliates to, directly
or indirectly, hire or solicit any employee of the Company or encourage any such employee to leave such employment or hire any
such employee who has left such employment, except pursuant to a general solicitation which is not directed specifically to any
such employees; provided, that nothing in this Section 7.6(b) shall prevent any Seller or any Affiliate thereof from
hiring (i) any employee whose employment has been terminated by the Company or the Buyer or (ii) after 180 days from the date of
termination of employment, any employee whose employment has been terminated by the employee.


 


(c)           
During the Restricted Period, none of the Sellers shall, nor shall any Seller permit any of his or its Affiliates to, directly
or indirectly, solicit or entice, or attempt to solicit or entice, any customers of the Company or potential customers of the Company
for purposes of diverting their business or services from the Company.


 


(d)           
The Sellers acknowledge that a breach or threatened breach of this Section 7.6 would give rise to irreparable
harm to the Buyer, for which monetary damages would not be an adequate remedy, and hereby agree that in the event of a breach or
a threatened breach by any Seller of any such obligations, the Buyer shall, in addition to any and all other rights and remedies
that may be available to it in respect of such breach, be entitled to equitable relief, including a temporary restraining order,
an injunction, specific performance, and any other relief that may be available from a court of competent jurisdiction (without
any requirement to post bond).


 


(e)           
The Sellers acknowledge that the restrictions contained in this Section 7.6 are reasonable and necessary to protect
the legitimate interests of the Buyer and constitute a material inducement to the Buyer to enter into this Agreement and consummate
the Contemplated Transactions. In the event that any covenant contained in this Section 7.6 should ever be adjudicated to
exceed the time, geographic, product or service, or other limitations permitted by applicable Legal Requirements in any jurisdiction,
then any court is expressly empowered to reform such covenant, and such covenant shall be deemed reformed, in such jurisdiction
to the maximum time, geographic, product or service, or other limitations permitted by applicable Legal Requirements. The covenants
contained in this Section 7.6 and each provision hereof are severable and distinct covenants and provisions. The invalidity
or unenforceability of any such covenant or provision as written shall not invalidate or render unenforceable the remaining covenants
or provisions hereof, and any such invalidity or unenforceability in any jurisdiction shall not invalidate or render unenforceable
such covenant or provision in any other jurisdiction.


 


 


 


 


 






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7.7             
Audited Financial Statements. The Sellers acknowledge that the Buyer or its Affiliate may be required
under applicable Legal Requirements to provide certain audited, unaudited, and pro forma financial statements covering the business
of the Company in accordance with its periodic reporting obligations under the Exchange Act (collectively the “Audited
Financials”). With respect to the foregoing, the Sellers and the Buyer agree that the Sellers shall afford to the Buyer,
its Affiliates, and their respective Representatives, at the Buyer’s expense, during normal business hours, reasonable access
to the books, records, and other data of the Sellers, and use reasonable best efforts to cause the Company’s accountants
to make available all of their work papers, that in each case include or relate to the Company or the business of the Company,
and, to the extent permitted by such accountants, the Buyer and its (or its Affiliate’s) independent registered public accounting
firm shall have the right to make copies and extracts therefrom, to the extent that such access may be reasonably required by
the Buyer or any of its Affiliates to prepare, complete, and file such Audited Financials (at the expense of the Buyer).


 


7.8             
[Intentionally Omitted]. 


 


7.9             
Further Assurances. Each party agrees (i) to furnish to the other party such further information, (ii)
to execute and deliver to the other party such other documents, and (iii) to do such other acts and things, all as the other
party reasonably requests for the purpose of carrying out the intent of this Agreement and the Transaction Documents.


 


7.10         
Reasonable Best Efforts to Close by November 3, 2016. Subject to the terms and conditions set forth herein
and taking into consideration additional time needed to secure consents, approvals, and other conditions to Closing set forth
in this Agreement, and subject to applicable Legal Requirements, each of the Sellers and the Buyer shall cooperate and use their
respective reasonable best efforts to take, or cause to be taken, all reasonably necessary action, and do, or cause to be done,
and assist and cooperate with the other parties in doing, all things necessary, proper or advisable to consummate the Closing
by November 3, 2016, including the satisfaction of the respective conditions set forth in Article 8 and Article 9.


 


ARTICLE
8

CONDITIONS PRECEDENT TO THE BUYER’S OBLIGATION TO CLOSE


 


The Buyer’s obligations
to purchase the Shares and to take the other actions required to be taken by the Buyer at the Closing are subject to the satisfaction,
at or prior to the Closing, of each of the following conditions (any or all of which may be waived in writing by the Buyer in whole
or in part in its sole discretion):


 


8.1             
Accuracy of Representations. Other than the representations and warranties of Seller contained in Section
3.3, the representations and warranties of the Company and the Sellers contained in this Agreement and any certificate or
other writing delivered pursuant hereto shall be true and correct in all respects (in the case of any representation or warranty
qualified by materiality or Material Adverse Effect) or in all material respects (in the case of any representation or warranty
not qualified by materiality or Material Adverse Effect) on and as of the Closing Date with the same effect as though made at
and as of such date (except those representations and warranties that address matters only as of a specified date, the accuracy
of which shall be determined as of that specified date in all respects). The representations and warranties of the Company and
the Sellers contained in Section 3.3 shall be true and correct in all respects on and as of the Closing Date with the same
effect as though made at and as of such date (except those representations and warranties that address matters only as of a specified
date, the accuracy of which shall be determined as of that specified date in all respects).


 


 


 


 






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8.2             
Performance of Covenants. Each of the covenants and obligations that the Sellers or the Company are required
to perform or to comply with pursuant to this Agreement at or prior to the Closing must have been duly performed and complied
with in all material respects.


 


8.3             
Consents. The Required Consents must have been obtained and must be in full force and effect and executed
counterparts thereof shall have been delivered to the Buyer at or prior to the Closing.


 


8.4             
Additional Documents. The Sellers shall have delivered or caused to be delivered to the Buyer each of
the following documents:


 


(i)                
stock certificates evidencing the Shares, free and clear of Encumbrances, duly endorsed in blank or accompanied by
stock powers or other instruments of transfer duly executed in blank;


 


(ii)             
a certificate of the Sellers, dated the Closing Date, certifying to the Buyer the satisfaction of the conditions
set forth in Sections 8.1 and 8.2;


 


(iii)           
a certificate, dated the Closing Date, executed by a duly authorized officer of the Company certifying (A) the Organization
Documents of the Company; (B) resolutions duly adopted by the Board of Directors of the Company authorizing and approving
the execution, delivery, and performance of this Agreement and the consummation of the Contemplated Transactions, and that such
resolutions have not been amended and remain in full force and effect; and (C) as to the incumbency of the officers of the Company
executing this Agreement and the other Transaction Documents;


 


(iv)            
the Employment Agreements, dated the Closing Date, executed by the Company and each Seller signatory thereto;


 


(v)              
duly executed written resignations of all directors and officers of the Company effective as of the Closing in respect
of the directorial, employment, or consulting relationships with the Company immediately prior to the Closing;


 


(vi)            
the Closing Payment Certificate;


 


(vii)         
subject to Section 7.2, such documents and forms, executed by the Sellers, as are required to complete properly
the Section 338(h)(10) Election, if any are required to be submitted prior to the Closing Date;


 


 


 


 


 


 


 


 






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(viii)       
a certificate by each Seller pursuant to Treasury Regulations Section 1.1445-2(b) certifying that such Seller is
not a foreign person within the meaning of Section 1445 of the IRC; and


 


(ix)            
a subordination agreement executed by the Sellers, in a form reasonably satisfactory to the Sellers, the Buyer, and
the sources of the Financing, pursuant to which the Sellers’ rights and claims with respect to the Promissory Note are subordinated
to the rights and claims of the sources of the Financing.


 


8.5             
No Material Adverse Effect. From the date of this Agreement, there shall not have occurred any Material
Adverse Effect.


 


8.6             
No Proceedings. Since the date of this Agreement, there must not have been commenced or Threatened against
the Buyer, the Company, any Seller, or any of their respective Affiliates any Proceeding (i) involving any challenge to, or seeking
damages or other relief in connection with, any of the Contemplated Transactions or (ii) that may have the likely effect of preventing,
delaying, making illegal, or otherwise interfering with any of the Contemplated Transactions.


 


8.7             
No Claim Regarding Ownership or Sale Proceeds. There shall not have been made or Threatened by any Person
any claim asserting that such Person (i) is the holder or the beneficial owner of, or has the right to acquire or to obtain beneficial
ownership of, any capital stock of, or any other voting, equity, or ownership interest in, the Company or (ii) is entitled to
all or any portion of the Purchase Price.


 


8.8             
Injunction. There shall not be in effect any Legal Requirement that prohibits the sale of the Shares
to the Buyer.


 


8.9             
No Indebtedness; Minimum Tangible Shareholders’ Equity.


 


(a)           
All Indebtedness of the Company other than the Closing Term Loan Payment Amount, the Closing Date Revolving Loan Amount,
and the guarantee under that certain lease in favor of EQYINVEST OWNER II, LTD., L.L.P., shall have been paid in full prior to
the Closing and the Sellers shall provide the Buyer with written evidence thereof, in form satisfactory to the Buyer, at or prior
to the Closing.


 


(b)           
The Sellers shall have delivered to the Buyer the Closing Date Balance Sheet showing that the Company has at least $20,000,000
in Tangible Shareholders’ Equity immediately prior to the Closing.


 


8.10         
Financing. The Buyer shall have received the Financing on terms acceptable to the Buyer, in its sole
and absolute discretion.


 


 


 


 


 


 






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ARTICLE
9

CONDITIONS PRECEDENT TO THE SELLERS’ OBLIGATION TO CLOSE


 


The Sellers’
obligations to sell the Shares and to take the other actions required to be taken by the Sellers at the Closing are subject to
the satisfaction, at or prior to the Closing, of each of the following conditions (any or all of which may be waived in writing
by the Sellers in whole or in part in their sole discretion):


 


9.1             
Accuracy of Representations. The representations and warranties of the Buyer contained in this Agreement
and any certificate or other writing delivered pursuant hereto shall be true and correct in all respects (in the case of any representation
or warranty qualified by materiality or Material Adverse Effect) or in all material respects (in the case of any representation
or warranty not qualified by materiality or Material Adverse Effect) on and as of the Closing Date with the same effect as though
made at and as of such date (except those representations and warranties that address matters only as of a specified date, the
accuracy of which shall be determined as of that specified date in all respects).


 


9.2             
Buyer’s Performance. Each of the covenants and obligations that the Buyer is required to perform
or to comply with pursuant to this Agreement at or prior to the Closing must have been performed and complied with in all material
respects.


 


9.3             
Additional Deliveries. The Buyer shall have delivered or caused to be delivered to the Sellers each of
the following:


 


(i)                
a certificate of the Buyer, dated the Closing Date, certifying to the Sellers the satisfaction of the conditions
set forth in Sections 9.1 and 9.2;


 


(ii)             
the Promissory Note, dated the Closing Date, executed by the Buyer;


 


(iii)           
the Purchase Price payable at Closing pursuant to Section 2.2; and


 


(iv)            
a certificate, dated the Closing Date, executed by a duly authorized officer of the Buyer certifying (A) the Organization
Documents of the Buyer; (B) resolutions duly adopted by the Board of Directors of the Buyer authorizing and approving the
execution, delivery, and performance of this Agreement and the consummation of the Contemplated Transactions, and that such resolutions
have not been amended and remain in full force and effect; and (C) as to the incumbency of the officers of the Company executing
this Agreement and the other Transaction Documents.


 


9.4             
Indebtedness Payoff Obligation. The portion of the Closing Date Revolving Loan Amount payable by the
Buyer shall have been paid in full pursuant to Section 2.2(b)(ii) and the Buyer shall provide the Sellers with written
evidence thereof, in form satisfactory to the Sellers, at or prior to the Closing.


 


9.5             
No Injunction. There shall not be in effect any Legal Requirement, Order, or Proceeding that prohibits
the sale of the Shares by the Sellers to the Buyer.


 


 


 


 


 






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9.6             
Consents. The Required Consents must have been obtained and must be in full force and effect prior to
the Closing.


 


ARTICLE
10

TERMINATION


 


10.1         
Termination of Agreement. This Agreement may be terminated and the Contemplated Transactions abandoned
at any time prior to the Closing:


 


(i)                
by mutual written consent of the Buyer and the Sellers’ Representative;


 


(ii)             
by either the Buyer or the Sellers’ Representative if there is any Legal Requirement that makes consummation
of the Contemplated Transactions illegal or otherwise prohibited or if consummation of the Contemplated Transactions would violate
any Final Order of any Governmental Body having competent jurisdiction;


 


(iii)           
by either the Buyer or the Sellers’ Representative on or after December 31, 2016 (the “Termination
Date”) if the Closing shall not have been consummated on or before the Termination Date; provided that such right
to terminate this Agreement will not be available to any party whose failure to perform in any material respect any obligation
of such party under this Agreement when performance thereof was due is the cause of the delay;


 


(iv)            
by the Buyer if any of the Sellers’ representations or warranties contained herein are inaccurate or untrue
such that the condition set forth in Section 8.1 would not be satisfied, and such inaccuracy cannot reasonably be expected
to be cured prior to the Termination Date;


 


(v)              
by the Seller’s Representative if any of the Buyer’s representations or warranties contained herein are
inaccurate or untrue such that the condition set forth in Section 9.1 would not be satisfied, and such inaccuracy cannot
reasonably be expected to be cured prior to the Termination Date;


 


(vi)            
by the Buyer, provided it is not then in material breach of any of its obligations under this Agreement, if any Seller
or the Company fails to perform or satisfy any agreement, covenant, condition, or obligation in this Agreement when performance
or satisfaction thereof is due such that the condition set forth in Section 8.2 would not be satisfied, and does not cure
the failure within twenty (20) Business Days after the Buyer delivers written notice thereof; or


 


(vii)         
by the Sellers’ Representative, provided the Sellers are not then in material breach of any of their obligations
under this Agreement, if the Buyer fails to perform or satisfy any agreement, covenant, condition, or obligation in this Agreement
when performance thereof is due such that the condition set forth in Section 9.2 would not be satisfied, and does not cure
the failure within twenty (20) Business Days after notice by the Sellers’ Representative thereof.


 


 


 


 


 


 






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The party desiring to terminate this Agreement
pursuant to this Section 10.1 will give written notice of such termination to the other party.


 


10.2         
Effect of Termination. Each party’s right to termination under Section 10.1 is in addition
to any other rights it may have under this Agreement or otherwise, and the exercise of a right of termination will not be an election
of remedies. If this Agreement is terminated pursuant to Section 10.1, all further obligations of the parties under this
Agreement will terminate without liability on the part of any party hereto, except that the obligations in Sections 12.1
and 12.2 will survive; provided, however, that if this Agreement is terminated by a party because of the
intentional breach of this Agreement by the other party or because one or more of the conditions to the terminating party’s
obligations under this Agreement is not satisfied as a result of the other party’s intentional failure to comply with its
obligations under this Agreement, the terminating party’s right to pursue all legal remedies will survive such termination
unimpaired.


 


ARTICLE
11

SURVIVAL; INDEMNIFICATION


 


11.1         
Survival. Subject to the limitations and other provisions of this Agreement,
the covenants, representations, and warranties contained herein (other than any covenants, representations, or warranties contained
in Section 3.11, Section 7.1, or Section 7.2, which are subject to Section 7.1) shall survive the
Closing and shall remain in full force and effect until the date that is eighteen (18) months from the Closing Date; provided,
that the representations and warranties in Section 3.1, Section 3.2(a), Section 3.3, Section 3.12,
Section 3.25, Section 4.1, Section 4.2(a), and Section 4.5 shall survive for the full period of the
applicable statutes of limitations (giving effect to any waiver, mitigation, or extension thereof) plus 60 days and; provided
further, that, all covenants and agreements of the parties contained herein (other than any covenants or agreements contained
in Section 7.1 or Section 7.2, which are subject to Section 7.1) to be performed after the Closing shall
survive the Closing for the period explicitly specified therein; and, provided further, that, under no circumstance shall
any claim arising under this Agreement be brought by Buyer or a Buyer Indemnified Party later than 7 years from the Closing. Upon
expiration of the periods set forth above in this Section 11.1, all liability of the Sellers with respect to such covenants, representations,
and warranties shall thereupon be extinguished. Notwithstanding the foregoing, any claims asserted in good faith with reasonable
specificity (to the extent known at such time) and in writing by notice from the non-breaching party to the breaching party prior
to the expiration date of the applicable survival period shall not thereafter be barred by the expiration of the relevant representation
or warranty and such claims shall survive until finally resolved


 


11.2         
Indemnification.


 


(a)           
Indemnification Obligations of the Sellers. Subject to the other terms and conditions of this Article 11,
the Sellers, jointly and severally, shall indemnify and defend each of the Buyer and its Affiliates (including the Company) (each,
a “Buyer Indemnified Party” and, collectively, the “Buyer Indemnified Parties”) against,
and shall hold each of them harmless from and against, and shall pay and reimburse each of them for, any and all Losses incurred
or sustained by, or imposed upon, any Buyer Indemnified Party based upon, arising out of, with respect to, or by reason of:


 


 


 






    	 	50	 



     

    

 


(i)                
any inaccuracy in or breach of any of the representations or warranties of the Company or the Sellers contained in
this Agreement or in any certificate or instrument delivered by or on behalf of the Company or any Seller pursuant to this Agreement
(other than in respect of Section 3.11, it being understood that the sole remedy for any such inaccuracy in or breach thereof
shall be pursuant to Section 7.1 or 7.2), as of the date such representation or warranty was made or as if such representation
or warranty was made on and as of the Closing Date (except for representations and warranties that expressly relate to a specified
date, in which case the inaccuracy in or breach of which will be determined with reference to such specified date); or


 


(ii)             
any breach or non-fulfillment of any covenant, agreement, or obligation to be performed by the Company or any Seller
pursuant to this Agreement (other than any breach or violation of, or failure to fully perform, any covenant, agreement, undertaking,
or obligation in Section 7.1 or 7.2, it being understood that the sole remedy for any such breach, violation, or
failure shall be pursuant to Section 7.1).


 


(b)           
Indemnification Obligations of the Buyer. Subject to the other terms and conditions of this Article 11, the
Buyer shall indemnify and defend each Seller and his or its Affiliates (each, a “Seller Indemnified Party” and,
collectively, the “Seller Indemnified Parties”) against, and shall hold each of them harmless from and against,
and shall pay and reimburse each of them for, any and all Losses incurred or sustained by, or imposed upon, any Seller Indemnified
Party based upon, arising out of, with respect to, or by reason of:


 


(i)                
any inaccuracy in or breach of any of the representations or warranties of the Buyer contained in this Agreement
or in any certificate or instrument delivered by or on behalf of the Buyer pursuant to this Agreement, as of the date such representation
or warranty was made or as if such representation or warranty was made on and as of the Closing Date (except for representations
and warranties that expressly relate to a specified date, the inaccuracy in or breach of which will be determined with reference
to such specified date); or


 


(ii)             
any breach or non-fulfillment of any covenant, agreement, or obligation to be performed by the Buyer pursuant to
this Agreement.


 


(c)           
Indemnification Limitations.


 


(i)                
The Sellers shall not be liable to the Buyer Indemnified Parties for indemnification under Section 11.2(a)(i)
until the aggregate amount of all Losses in respect of indemnification under Section 11.2(a)(i) exceeds $560,000 (the “Basket”),
in which event the Sellers shall only be required to pay or be liable for Losses in excess of the Basket. Notwithstanding anything
to the contrary, the aggregate amount of all Losses for which the Sellers shall be liable pursuant to Section 11.2(a)(i)
shall not exceed $5,600,000. Notwithstanding the foregoing, the limitations set forth in this Section 11.2(c)(i) shall not
apply to Losses based upon, arising out of, with respect to, or by reason of any inaccuracy in or breach of any representation
or warranty in Section 3.1, Section 3.2(a), Section 3.3, Section 3.25, or Section 3.26(b).


 


 


 


 


 






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(ii)             
In addition to the limitations set forth in Section 11.2(c)(i), payments of the Sellers pursuant to Section
11.2(a) in respect of any Loss shall be further limited to the amount of any liability or damage to the Buyer Indemnified Party
that remains after deducing therefrom any insurance proceeds, indemnity, contribution, or similar payment actually received by
the Buyer Indemnified Party in respect of any such claim, less any related costs and expenses, including the aggregate cost of
pursuing any related insurance claims and any related increases in insurance premiums or other chargebacks (it being agreed that
the Buyer Indemnified Party shall not have any obligation to seek to recover any insurance proceeds in connection with making a
claim under this Article 11 and that, promptly after the realization of any insurance proceeds, indemnity contribution,
or similar payment, the Buyer Indemnified Party shall reimburse the Indemnifying Party for such reduction in Losses for which the
Buyer Indemnified Party was indemnified prior to the realization of reduction of such Losses).


 


(d)           
Materiality Scrape. For purposes of this Article 11, any inaccuracy in or breach of any representation or
warranty shall be determined without regard to any materiality, Material Adverse Effect, or other similar qualification contained
in or otherwise applicable to such representation or warranty.


 


11.3         
Indemnification Procedures. The party making a claim under this Article 11 is referred to as the
“Indemnified Party”, and the party against whom such claims are asserted under this Article 11 is referred
to as the “Indemnifying Party”. The Sellers’ Representative shall administer any Losses claimed against,
or by, the Sellers pursuant to this Article 11. For all purposes under this Section 11.3, the Sellers’ Representative
shall be the exclusive agent and shall act on behalf of all of the Sellers, all such actions of the Sellers’ Representative
hereunder shall bind all of the Sellers, and the term Indemnifying Party, when used in relation to the Sellers in this Section
11.3, shall be deemed to be a reference to the Sellers’ Representative.


 


 


 


 


 


 


 


 


 


 


 


 






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(a)           
Third Party Claims. If any Indemnified Party receives notice of the assertion or commencement of any Proceeding made
or brought by any Person who is not a party to this Agreement or an Affiliate of a party to this Agreement or a Representative
of the foregoing (a “Third Party Claim”) against such Indemnified Party with respect to which the Indemnifying
Party is obligated to provide indemnification under this Agreement, the Indemnified Party shall give the Indemnifying Party reasonably
prompt written notice thereof, but in any event not later than 30 calendar days after receipt of such notice of such Third Party
Claim. The failure to give such prompt written notice shall not, however, relieve the Indemnifying Party of its indemnification
obligations, except and only to the extent that the Indemnifying Party forfeits rights or defenses by reason of such failure. Such
notice by the Indemnified Party shall describe the Third Party Claim in reasonable detail, shall include copies of all material
written evidence thereof, and shall indicate the estimated amount, if reasonably practicable, of the Loss that has been or may
be sustained by the Indemnified Party. The Indemnifying Party shall have the right to participate in, or by giving written notice
to the Indemnified Party, to assume the defense of any Third Party Claim at the Indemnifying Party’s expense and by the Indemnifying
Party’s own counsel, and the Indemnified Party shall cooperate in good faith in such defense; provided, that if the
Indemnifying Party is a Seller, such Indemnifying Party shall not have the right to defend or direct the defense of any such Third
Party Claim that seeks an injunction or other equitable relief against the Indemnified Party so long as the Buyer or other Buyer
Indemnified Party diligently, in good faith, defends such action to completion. In the event that the Indemnifying Party assumes
the defense of any Third Party Claim, subject to Section 11.3(b), it shall have the right to take such action as it deems
necessary to avoid, dispute, defend, appeal, or make counterclaims pertaining to any such Third Party Claim in the name and on
behalf of the Indemnified Party. The Indemnified Party shall have the right to participate in the defense of any Third Party Claim
with counsel selected by it subject to the Indemnifying Party’s right to control the defense thereof. The fees and disbursements
of such counsel shall be at the expense of the Indemnified Party, provided, that if in the reasonable opinion of counsel
to the Indemnified Party, (A) there are legal defenses available to an Indemnified Party that are different from or additional
to those available to the Indemnifying Party or (B) there exists a conflict of interest between the Indemnifying Party and the
Indemnified Party that cannot be waived, the Indemnifying Party shall be liable for the reasonable fees and expenses of counsel
to the Indemnified Party in each jurisdiction for which the Indemnified Party determines counsel is required to the extent necessary
for the Indemnified Party to avail itself of the aforementioned legal defenses and to defend itself with respect to the matter
involving a non-waivable conflict of interest. If the Indemnifying Party elects not to compromise or defend such Third Party Claim,
fails to promptly notify (within 15 days of its receipt of notice of a Third Party Claim) the Indemnified Party in writing of its
election to defend as provided in this Agreement, or fails to diligently prosecute the defense of such Third Party Claim, the Indemnified
Party may, subject to Section 11.3(b), pay, compromise, and defend such Third Party Claim and seek indemnification for any
and all Losses based upon, arising from, or relating to such Third Party Claim. The Sellers and the Buyer shall cooperate with
each other in all reasonable respects in connection with the defense of any Third Party Claim, including making available (subject
to the provisions of Section 7.5) records relating to such Third Party Claim and furnishing, without expense (other than
reimbursement of actual out-of-pocket expenses) to the defending party, management employees of the non-defending party as may
be reasonably necessary for the preparation of the defense of such Third Party Claim.


 


(b)           
Settlement of Third Party Claims. Notwithstanding any other provision of this Agreement, the Indemnifying Party shall
not enter into settlement of any Third Party Claim without the prior written consent of the Indemnified Party, except as provided
in this Section 11.3(b). If a firm offer is made to settle a Third Party Claim without leading to liability or the creation
of a financial or other obligation on the part of the Indemnified Party and provides, in customary form, for the unconditional
release of each Indemnified Party from all liabilities and obligations in connection with such Third Party Claim and the Indemnifying
Party desires to accept and agree to such offer, the Indemnifying Party shall give written notice to that effect to the Indemnified
Party. If the Indemnified Party fails to consent to such firm offer within ten (10) days after its receipt of such notice, the
Indemnified Party may continue to contest or defend such Third Party Claim and in such event, the maximum liability of the Indemnifying
Party as to such Third Party Claim shall not exceed the amount of such settlement offer. If the Indemnified Party fails to consent
to such firm offer and also fails to assume defense of such Third Party Claim, the Indemnifying Party may settle the Third Party
Claim upon the terms set forth in such firm offer to settle such Third Party Claim. If the Indemnified Party has assumed the defense
pursuant to Section 11.3(a), it shall not agree to any settlement without the written consent of the Indemnifying Party
(which consent shall not be unreasonably withheld, delayed, denied, or conditioned).


 


 


 


 


 


 


 


 






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(c)           
Direct Claims. Any Proceeding by an Indemnified Party on account of a Loss which does not result from a Third Party
Claim (a “Direct Claim”) shall be asserted by the Indemnified Party giving the Indemnifying Party reasonably
prompt written notice thereof, but in any event not later than 30 days after the Indemnified Party becomes aware of such Direct
Claim. The failure to give such prompt written notice shall not, however, relieve the Indemnifying Party of its indemnification
obligations, except and only to the extent that the Indemnifying Party forfeits rights or defenses by reason of such failure. Such
notice by the Indemnified Party shall describe the Direct Claim in reasonable detail, shall include copies of all material written
evidence thereof, and shall indicate the estimated amount, if reasonably practicable, of the Loss that has been or may be sustained
by the Indemnified Party. The Indemnifying Party shall have 30 days after its receipt of such notice to respond in writing to such
Direct Claim. The Indemnified Party shall allow the Indemnifying Party and its professional advisors to investigate the matter
or circumstance alleged to give rise to the Direct Claim, and whether and to what extent any amount is payable in respect of the
Direct Claim and the Indemnified Party shall assist the Indemnifying Party’s investigation by giving such information and
assistance (including access to the Company’s premises and personnel and the right to examine and copy any accounts, documents,
or records) as the Indemnifying Party or any of its professional advisors may reasonably request. If the Indemnifying Party does
not so respond within such 30-day period, the Indemnifying Party shall be deemed to have rejected such claim, in which case the
Indemnified Party shall be free to pursue such remedies as may be available to the Indemnified Party on the terms and subject to
the provisions of this Agreement.


 


(d)           
Tax Claims. Notwithstanding any other provision of this Agreement, the control of any claim, assertion, event, or
proceeding in respect of Taxes of the Company (including, but not limited to, any such claim in respect of a breach of the representations
and warranties in Section 3.11 hereof or any breach or violation of or failure to fully perform any covenant, agreement,
undertaking, or obligation in Section 7.1 or Section 7.2) shall be governed exclusively by Section 7.1.


 


11.4         
Payments.  Once a Loss is agreed to by the Indemnifying Party or finally adjudicated to be payable pursuant
to this Article 11, the Indemnifying Party shall satisfy its obligations within fifteen (15) days of such final, non-appealable
adjudication by wire transfer of immediately available funds. The parties hereto agree that, subject to the immediately preceding
sentence of this Section 11.4, should an Indemnifying Party not make full payment of any such obligations within such fifteen
(15) day period, any amount payable shall accrue interest from and including the date of agreement of the Indemnifying Party or
final, non-appealable adjudication to but excluding the date such payment has been made at a rate per annum equal to the lesser
of 10% or the highest rate permitted by applicable Legal Requirements. Such interest shall be calculated daily on the basis of
a 365 day year and the actual number of days elapsed.


 


11.5         
Offset. Acting in good faith and upon written notice to the Sellers’ Representative specifying
in reasonable detail the basis therefor, the Buyer may withhold and setoff against amounts otherwise payable by the Buyer under
the Promissory Note the amount of any Losses for which any Buyer Indemnified Party may be entitled to indemnification under this
Article 11 or Section 7.1; provided, however, that, within five (5) Business Days of receipt of such notice,
the Sellers’ Representative may elect to challenge the Buyer’s action in writing, in which case (i) the issue of whether
the Buyer is entitled to indemnification affording such setoff shall be determined pursuant to Section 12.10 and (ii) the
amount withheld and setoff by the Buyer shall be deposited by the Buyer into the registry of the court pending agreement of the
parties regarding the disposition of such amount or the final, non-appealable adjudication thereof by the court. The exercise
of such right of setoff by the Buyer in good faith, whether or not ultimately determined to be justified, will not constitute
a breach under the Promissory Note.


 


 


 


 


 


 


 






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11.6         
Treatment of Indemnification Payments. All indemnification payments made under this Agreement shall be
treated by the parties as an adjustment to the Purchase Price for Tax purposes, unless otherwise required by Legal Requirements.


 


11.7         
[Intentionally Omitted].


 


11.8         
Exclusive Remedies. Subject to Section 7.6 and Section 12.13, the parties acknowledge and
agree that their sole and exclusive remedy with respect to any and all claims (other than claims arising from fraud or willful
misconduct on the part of a party hereto in connection with the transactions contemplated by this Agreement) for any breach of
any representation, warranty, covenant, agreement, or obligation set forth herein or otherwise relating to the subject matter
of this Agreement, shall be pursuant to the indemnification provisions set forth in Section 7.1 and this Article 11.
In furtherance of the foregoing, each party hereby waives, to the fullest extent permitted under applicable Legal Requirements,
any and all rights, claims, and causes of action for any breach of any representation, warranty, covenant, agreement, or obligation
set forth herein or otherwise relating to the subject matter of this Agreement it may have against the other parties hereto and
their Affiliates and each of their respective Representatives arising under or based upon any Legal Requirements, except pursuant
to the indemnification provisions set forth in Section 7.1 and this Article 11. Nothing in this Section 11.8
shall limit any Person’s right to seek and obtain any equitable relief to which any Person shall be entitled or to seek
any remedy on account of any party’s fraud or intentional misconduct.


 


11.9         
Mitigation. Each Indemnified Party shall take all reasonable steps to mitigate any Loss upon becoming
aware of any event or circumstance that would reasonably be expected to, or does, give rise thereto, including incurring costs
only to the minimum extent necessary to remedy the breach that gave rise to such Loss.


 


11.10     
No Circular Recovery. Each Seller hereby agrees that he or it will not make any claim for indemnification
against the Buyer or the Company by reason of the fact that such Seller was a Representative of the Company or was serving as
such for another Person at the request of the Company (whether such claim is for Losses of any kind or otherwise and whether such
claim is pursuant to any Legal Requirement, Organizational Document, Contract, or otherwise) with respect to any claim brought
by a Buyer Indemnified Party against any Seller relating to this Agreement or any of the Contemplated Transactions. With respect
to any claim brought by a Buyer Indemnified Party against any Seller relating to this Agreement or any of the Contemplated Transactions,
each Seller expressly waives any right of subrogation, contribution, advancement, indemnification, or other claim against the
Company with respect to any amounts such Seller is liable for pursuant to Section 7.1 or this Article 11. Notwithstanding
the foregoing, this Section 11.10 shall not restrict, impede, or limit any right of a Seller pursuant to an Employment
Agreement, including any right to subrogation, contribution, advancement, indemnification, or other claim against the Company
by a Seller arising pursuant to an Employment Agreement.


 


 


 


 


 


 


 


 


 


 


 


 


 






    	 	55	 



     

    

 


ARTICLE
12

GENERAL PROVISIONS


 


12.1         
Expenses. Except as otherwise expressly provided in this Agreement, each party will bear its respective
expenses incurred in connection with the preparation, execution, and performance of this Agreement and the Contemplated Transactions,
including all fees and expenses of Representatives. All such expenses of the Company and the Sellers incurred through and including
the Closing Date (collectively, “Transaction Expenses”) shall be borne by the Sellers and paid pursuant to
Section 2.2.


 


12.2         
Public Announcements. No party shall make any public announcement or statement with respect to this Agreement
or the Contemplated Transactions prior to the Closing, except that the Buyer and its Affiliates may make any disclosure required
under applicable Legal Requirements. No Seller shall make any public announcement or statement with respect to this Agreement
or the Contemplated Transactions after the Closing without the approval of the Buyer, which approval will not be unreasonably
withheld, delayed, denied, or conditioned. In the event the Buyer determines to make any public announcement or statement concerning
this Agreement or the Contemplated Transactions after Closing, the Buyer agrees to notify the Sellers’ Representative of
the Buyer’s intention to make such announcement or statement and provide the Sellers’ Representative with the text
of the announcement in advance of its release to the public.


 


12.3         
Authority and Rights of the Sellers’ Representative. By executing this Agreement, each Seller appoints
Rodney Spriggs as the Sellers’ Representative for all purposes under this Agreement and authorizes the Sellers’ Representative
to act as his or its attorney in fact on behalf of such Seller and in such Seller’s name to carry out the functions assigned
to the Sellers’ Representative in this Agreement and the Promissory Note. Any Contract, notice, waiver, or other arrangement
signed by the Sellers’ Representative shall be binding and enforceable against each Seller as if such Seller were a signatory
thereto.


 


12.4         
Notices. All notices, requests, consents, claims, demands, waivers, and other communications hereunder
shall be in writing and shall be deemed to have been given (i) when delivered by hand (with written confirmation of receipt);
(ii) when received by the addressee if sent by a nationally recognized overnight courier (receipt requested); (iii) on the date
sent by facsimile or e-mail of a PDF document (with confirmation of transmission) if sent during normal business hours of the
recipient, and on the next Business Day if sent after normal business hours of the recipient; or (iv) on the third Business Day
after the date mailed, by certified or registered mail, return receipt requested, postage prepaid. Such communications must be
sent to the respective parties at the following addresses (or at such other address for a party as shall be specified in a notice
given in accordance with this Section 12.4):


 


 


 


 


 


 


 


 


 






    	 	56	 



     

    

 


(a)        
If to the Buyer:


 


Vintage Stock Affiliated Holdings
LLC


c/o Live Ventures Incorporated


325 East Warm Springs Road


Suite 102


Las Vegas, Nevada 89119


Attn:
Jon Isaac


Email: j.isaac@isaac.com


Facsimile No.: [858-259-6661]


 


with a copy (which shall not
constitute notice) to:


 


Baker & Hostetler LLP


600 Anton Boulevard


Suite 900


Costa Mesa, California 92626


Attn: Randolf W. Katz, Esq.


Email: rwkatz@bakerlaw.com


Facsimile No.: 714-966-8802


 


(b)        
If to the Company (prior to the Closing):


 


Vintage Stock, Inc.


202 E. 32nd Street


Joplin, Missouri 64804


Attn: Rodney Spriggs, President
and CEO


Email: Rodney.spriggs@vintagestock.com


Facsimile No.: 417-782-0024


 


with a copy (which shall not
constitute notice) to:


 


Vintage Stock, Inc.


202 E. 32nd Street


Joplin, Missouri 64804


Attn: Ken Caviness, CFO


Email: ken.caviness@vintagestock.com


Facsimile No.: ____________


 


with a copy (which shall not
constitute notice) to:


 


Mann Conroy LLC


1316 Saint Louis Avenue


2nd Floor


Kansas City, Missouri 64101


Attn: Kyle Conroy, Esq.


Email: kconroy@mannconroy.com


Facsimile No.:


 


 


 


 


 


 






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(c)         
If to the Sellers’ Representative:


 


Rodney Spriggs


c/o Vintage Stock, Inc.


202 E. 32nd Street


Joplin, Missouri 64804


Email: Rodney.spriggs@vintagestock.com


Facsimile No.: 417-782-0024


 


with a copy (which
shall not constitute notice) to:


 


Mann Conroy LLC


1316 Saint Louis Avenue


2nd Floor


Kansas City, Missouri 64101


Attn: Kyle Conroy, Esq.


Email: kconroy@mannconroy.com


Facsimile No.:


 


12.5         
Amendment and Modification; Waiver. This Agreement may only be amended, modified, or supplemented by
an agreement in writing signed by each party hereto. No waiver by any party of any of the provisions hereof shall be effective
unless explicitly set forth in writing and signed by the party so waiving. No waiver by any party shall operate or be construed
as a waiver in respect of any failure, breach, or default not expressly identified by such written waiver, whether of a similar
or different character, and whether occurring before or after that waiver. No failure to exercise, or delay in exercising, any
right, remedy, power, or privilege arising from this Agreement shall operate or be construed as a waiver thereof; nor shall any
single or partial exercise of any right, remedy, power, or privilege hereunder preclude any other or further exercise thereof
or the exercise of any other right, remedy, power, or privilege.


 


12.6         
Entire Agreement. This Agreement and the other Transaction Documents constitute the sole and entire agreement
of the parties to this Agreement with respect to the subject matter contained herein and therein, and supersede all prior and
contemporaneous understandings and agreements, both written and oral, with respect to such subject matter. In the event of any
inconsistency between the statements in the body of this Agreement and those in the other Transaction Documents, the Exhibits,
and Disclosure Schedule (other than an exception expressly set forth as such in the Disclosure Schedule), the statements in the
body of this Agreement will control.


 


12.7         
Successors and Assigns. This Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and permitted assigns. Neither any Seller nor the Buyer may assign its rights or obligations
hereunder without the prior written consent of the other party (which consent shall not be unreasonably withheld, delayed, denied,
or conditioned); provided, however, that the Buyer (i) may collaterally assign any or all of its rights and obligations
hereunder to any provider of debt financing (including the Financing) to it or any of its Affiliates and (ii) may assign any of
its rights under this Agreement to any Affiliate of the Buyer, in each case without obtaining prior consent. No assignment shall
relieve the assigning party of any of its obligations hereunder.


 


 


 


 


 


 






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12.8         
Severability. If any term or provision of this Agreement is invalid, illegal, or unenforceable in any
jurisdiction, such invalidity, illegality, or unenforceability shall not affect any other term or provision of this Agreement
or invalidate or render unenforceable such term or provision in any other jurisdiction. Except as provided in Section 7.6(e),
upon such determination that any term or other provision is invalid, illegal, or unenforceable, the parties hereto shall negotiate
in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in a mutually
acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the greatest
extent possible.


 


12.9         
Construction of Terms.  When reference is made in this Agreement to an Article or Section, such reference
shall be to an Article or Section of this Agreement, unless otherwise indicated. When a reference is made in this Agreement to
a party or parties, such reference is to parties to this Agreement, unless otherwise indicated. The table of contents and headings
contained in this Agreement are for convenience of reference only and shall not affect in any way the meaning or interpretation
of this Agreement. Whenever the words “include,” “includes,” or “including” are used in this
Agreement, they shall be deemed to be followed by the words “without limitation.” Unless the context of this Agreement
otherwise requires, (i) words of any gender include each other gender; (ii) words using the singular or plural number also
include the plural or singular number, respectively; (iii) the terms “hereof,” “herein,” “hereby,”
and derivative or similar words refer to this entire Agreement; and (iv) any reference to any Legal Requirement shall be deemed
also to refer to all rules and regulations promulgated thereunder. References to Contracts and other documents shall be deemed
to include all subsequent amendments and other modifications thereto. Whenever this Agreement refers to a number of days, such
number shall refer to calendar days unless Business Days are specified. The language used in this Agreement is the language chosen
by the parties to express their mutual intent, and no rule of strict construction shall be applied against any party.


 


12.10     
Governing Law; Jurisdiction; Jury. This Agreement shall be governed by and construed in accordance with
the internal laws of the State of Missouri without giving effect to any choice or conflict of law provision or rule. Any legal
suit, action, or proceeding arising out of or based upon this Agreement or the Contemplated Transactions may be instituted in
the federal courts of the Western District of Missouri or the courts of the State of Missouri located in Newton County, Missouri.
Each party hereto irrevocably submits to the exclusive jurisdiction of such courts in any such suit, action, or proceeding. EACH
PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY THAT MAY ARISE UNDER THIS AGREEMENT OR THE CONTEMPLATED TRANSACTIONS IS LIKELY
TO INVOLVE COMPLICATED AND DIFFICULT ISSUES AND, THEREFORE, EACH SUCH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT
MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LEGAL ACTION ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE CONTEMPLATED TRANSACTIONS.


 


12.11     
Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original,
but all of which together shall be deemed to be one and the same agreement. A signed copy of this Agreement delivered by facsimile,
e-mail, or other means of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed
copy of this Agreement.


 


 


 


 


 


 


 






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12.12     
No Third Party Beneficiaries; No Recourse to Financing Sources. 


 


(a)           
Except as provided in Section 7.1 and Article 11, this Agreement is for the sole benefit of the parties hereto
and their respective successors and permitted assigns and nothing herein, express or implied, is intended to or shall confer upon
any other Person or entity any legal or equitable right, benefit, or remedy of any nature whatsoever under or by reason of this
Agreement. Notwithstanding the foregoing, each financing source for the Financing shall be an express third-party beneficiary with
respect to Section 12.12(b).


 


(b)           
Subject to the rights of the parties to any Contract entered into in connection with the Financing, none of the parties
hereto, nor any of their respective Affiliates, solely in their respective capacities as parties to this Agreement, shall have
any rights or claims against any financing source for the Financing or any Affiliate thereof, solely in their respective capacities
as lenders or arrangers in connection with the Financing, and such financing sources, solely in their respective capacities as
lenders or arrangers, shall not have any rights or claims against any party hereto or any Affiliate thereof, in connection with
this Agreement or the Financing, whether at law or equity, in contract, in tort, or otherwise. Notwithstanding anything to the
contrary in this Agreement, this Section 12.12(b) may not be amended or waived without the consent of the financing sources
for the Financing.


 


12.13     
Specific Performance. The parties agree that irreparable damage would occur if any provision of this
Agreement were not performed in accordance with the terms hereof and that the parties shall be entitled to specific performance
of the terms hereof, in addition to any other remedy to which they are entitled at law or in equity, and without having to prove
the inadequacy of any other remedy they may have at law or in equity and without being required to post bond or other security.


 


12.14     
Certain Legal Matters. The Sellers (i) acknowledge that Baker & Hostetler LLP has represented the
Buyer and its Affiliates in connection with the transactions contemplated by this Agreement and the other Transaction Documents
and (ii) consent to the representation by Baker & Hostetler LLP of the Buyer and its Affiliates (including the Company) in
any future post-closing matter, including post-closing disputes concerning this Agreement or the Contemplated Transactions.


 


12.15     
Acknowledgment. The Sellers acknowledge that the audited Financial Statements referred to in Section
3.4(c) will be included in the Current Report (or an amendment thereto) on Form 8-K of an Affiliate of the Buyer to be filed
after the Closing that describes the Contemplated Transactions and thereafter will be consolidated into such Affiliate’s
periodic reports to be filed under the Exchange Act.


 


 


 


 


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intentionally left blank. The signature page follows.]


 


 


 


 


 


 


 






    	 	60	 



     

    

 


IN WITNESS WHEREOF,
the parties have duly executed and delivered this Stock Purchase Agreement as of the date first written above.


 


THE BUYER:


 


VINTAGE STOCK AFFILIATED HOLDINGS LLC


 


 


By: /s/ Jon Isaac                                    


Jon Isaac


President and Chief
Executive Officer


 


THE COMPANY:


 


VINTAGE STOCK, INC.


 


By: /s/ Rodney D. Spriggs                   


Rodney D. Spriggs


President and Chief
Executive Officer


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


[Signature Page 1
of 2 to the Stock Purchase Agreement]






    	 	 	 



     

    

 


THE SELLERS:


 





	/s/ Kenneth L. Caviness	 	/s/ Rodney D. Spriggs	 
	Kenneth L. Caviness, trustee of	 	Rodney D. Spriggs, trustee of	 
	THE KEN AND DEANNA CAVINESS	 	THE RODNEY AND SHERRY SPRIGGS	 
	LIVING TRUST, dated July 12, 2002	 	LIVING TRUST, dated April 18, 2012	 
	 	 	 	 
	/s/ Deanna L. Caviness	 	/s/ Sherry L. Spriggs	 
	Deanna L. Caviness, trustee of	 	Sherry L. Spriggs, trustee of	 
	THE KEN AND DEANNA CAVINESS	 	THE RODNEY AND SHERRY SPRIGGS	 
	LIVING TRUST, dated July 12, 2002	 	LIVING TRUST, dated April 18, 2012	 
	 	 	 	 
	/s/ Steven D. Wilcox	 	 	 
	Steven D. Wilcox, trustee of	 	 	 
	THE STEVEN AND ANNA WILCOX	 	 	 
	LIVING TRUST, dated May 15, 2012	 	 	 
	 	 	 	 
	/s/ Anna V. Wilcox	 	 	 
	Anna V. Wilcox, trustee of	 	 	 
	THE STEVEN AND ANNA WILCOX	 	 	 
	LIVING TRUST, dated May 15, 2012	 	 	 
	 	 	 	 
	/s/ Tyler L. Caviness	 	/s/ Erin R. (Caviness) Mazzoni	 
	Tyler L. Caviness, trustee of	 	Erin R. (Caviness) Mazzoni, trustee of	 
	THE TYLER L CAVINESS TRUST,	 	THE ERIN R. (CAVINESS) MAZZONI	 
	dated January 1, 2014	 	TRUST, dated January 1, 2014	 
	 	 	 	 
	 	 	 	 
	/s/ Rodney D. Spriggs	 	/s/ Kenneth L. Caviness	 
	Rodney D. Spriggs, acting in his individual	 	Kenneth L. Caviness, acting in his	 
	capacity	 	individual capacity	 
	 	 	 	 
	 	 	 	 
	/s/ Steven D. Wilcox	 	 	 
	Steven D. Wilcox, acting in his individual	 	 	 
	capacity	 	 	 
	 	 	 	 
	THE SELLERS’ REPRESENTATIVE:	 	 	 
	 	 	 	 
	/s/ Rodney Spriggs	 	 	 
	Rodney Spriggs	 	 	 







 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


[Signature Page 2
of 2 to the Stock Purchase Agreement]